Creative accounting" may be considered a very old technique which has conserved its appeal over the ages. However, using such methods could prove costly. The motivation behind techniques of this type varies: sometimes, executive and financial officers, accountants or auditors have a lot to gain by presenting false data to the interested parties. The victim may be the state, which collects less income taxes, creditors, who are not aware of the real situation of the company they have lent money to, clients, who continue to do business with an organization that could go bankrupt at any time and so on.

In other cases, the terrible pressure to which businesses are subjected by the fact that investors and resources are scarce, induces their managers to use deceptive or even fraudulent accounting practices. Usage of such methods often leads to drastic consequences, both from a legal and an economical point-of-view. Although these...
[ View Full Essay]