Creative accounting versus accounting fraud : a review of the literature

الملخص EN

Financial information manipulation has been one of the most important issues since the failure of major corporations worldwide such as Enron, World.Com, Arthur Anderson and others.

Although, these companies differ in their core and operations, they share the same causes for their failure, which is really the practice of financial information manipulation.

These manipulation activities are commonly referred to as "creative accounting." However, the concept of creative accounting is sometimes used as a synonym for accounting fraud in literature.

Thereby, this research aims to review the existing literature in order to shed more light on the main features of creative accounting and accounting fraud, as well as the distinctions between them.

In doing so, the findings of other prior studies, using a range of alternative available resources to gather the related literature, were reviewed to present the results of this research.

The main findings of this research suggest that professional accountants and companies‘ executives are still able to find loopholes in the existing accounting standards to manipulate financial reports.

In addition, it is still difficult to establish a framework that incorporates all the considerations that are essential to distinguish between creative accounting and accounting fraud.

To overcome on this phenomenon, the potential solution is by identifying executives‘ motivations to engage in manipulation behaviour, which can enable academics and regulators to establish a framework for distancing them, as well as may help to identify fraudulent actions by pursuing how executives behave to achieve their goals and intentions.