Any Justification for Creative Accounting: Where Are Fraud, Examiners?

Abstract

The slippery slope is described as ‘playing the system’, ‘beating the system’, and fundamentally neglecting the laid down rules, regulation within the system for selfish reasons. This presentation revealed the justification, ethical or otherwise for creative accounting, aggressive earnings management and related concepts as it affects the professional judgement of fraud examiners. The role of fraud examiners is put to light in ensuring that the users of financial statements are not continued to be put in the dark with respect to the state of the concerned company. This presentation also explores both positive and negative side of Creative accounting and revealed the consequences of the same within the context of fraud examination and financial reporting structures. It is concluded that The use of aggressive accounting techniques may not necessarily be fraudulent. However, it may be the start of a slippery slope, where legitimate earnings management descends into earnings manipulation or fraudulent accounting. This presentation recommends that fraud examiners should take seriously the ACFE code of ethics in resolving the allegation of fraudulent activities as may also concern creative accounting by seeing the bigger picture.