Creative accounting practices - Its’ Pros & Cons: An analysis

Financial statements/reports are the windows that depict the true and fair picture of the affairs of an enterprise. These are one of the most important ways for most business to reveal their performance and status to its stakeholders such as creditors, investors, regulators and employees. As an important means of representing the internal information to the public, the making of the statements is also desired to fulfill all the principles, regulations, standards, etc. and ideally should reflect a company's wealth and activity performance through a transparent accounting system, therefore become the right tool to a fair and true company evaluation. Corporate governance can play an important role in financial reporting of the company because financial report shows the state of affairs of the company and investors take decision on the basis of financial report of the company. So it is necessary that financial report should show “True and Fair view’ of the company. But now-a-days, in order to create hype in the market, the companies are practicing some window-dressing practices. They are adopting some malpractices such as Creative Accounting. On this backdrop, the present study has been undertaken to analyze the impact of Creative Accounting Practices on the performance of a company in particular and stakeholders in general.