Importance Of Creative Accounting

1664 Words7 Pages
CHAPTER ONE: INTRODUCTION 1.1. Background of the study Globally, financial reporting is notably an important concept for achieving effective functioning of corporate governance systems in banking industry. It is evident that financial accounting reports are produced in banking industry to indicate the true and fair state of affair of banking companies’ entities (Arnold, 2009). The financial accounting reports are essential since it helps stakeholders and other banking industry users to make informed decisions (Schipper, 2003).The current accounting practices allow a certain degree of policies and professional judgment in determining methods of measurement criteria for recognition and also definition of the accounting entity and this exercise is commonly referred to as creative accounting. There are various definitions of creative accounting that encompasses earnings management and other concepts relating to accounting manipulation in literature. Gowthorpe&Amat (2005) uses creative accounting and earnings management synonymously; the authors considers creative accounting as involving transformation of…show more content…
1.3. Objectives of the study 1.3.1. General objective The general objective of this research study is to examine creative accounting practices and its role in banking industry crises and failure (case study of Kenya) and an empirical investigation on the opinion of experienced experts of Kenya banking industry. 1.3.2. Specific objectives i. To investigate whether creative accounting practices cause banking industry crises and failure in Kenya. ii. To examine the reasons for the increased use of creative accounting practices in Kenya banking
Open Document