The Impact of Creative Accounting and Auditing on Business Administration and Maximizing the Value of Business

Abstract

According to the extreme significance of accounting information, the increasing number of users and its significant role in decision making, this study aims to highlight the seriousness of creative accounting and its impact on decision making which affects the profits and thus to maximize the value of business as using accounting can uncover fraud and manipulation of financial statements, resulting the lack of credibility and fairness of published financial statements, from a creative accounting perspective.

The creative accounting in considered a contrary to the ethics and behavior of profession as well as a way of manipulation and embezzlement. Thus, the researcher aimed to introduce its methods and ways and its impact on business profits to enable the reader to recognize it very well.

As for the contemporary conditions in business world in beautifying some financial information for the sake of improving the financial state in the view of investors in terms of profitability and financial position for the purpose of achieving personal targets, those administrations tend to employ creative accounting exploiting the diversity of accounting alternatives that can be counted upon in financial statements preparation; obviously, this will negatively affect the credibility of these statements and misdirect users.

The role of auditor comes in detecting manipulation, preventing it, and reducing its effects due to the importance of auditing in detecting such manipulation in statements and financial reports.