The Ethics of Creative

Economics Working Paper

THE ETHICS OF CREATIVE

ACCOUNTING

Oriol Amat *

and

John Blake **

and

Jack Dowds ***

December 1999

Keywords: Accounting, creative accounting, ethics

Journal of Economic Literature classification: M41

_______________________________________________________

* Universitat Pompeu Fabra

** Central Lancashire University, England

*** Massey University, New Zealand

Abstract

The term 'creative accounting' can be defined in a number of ways. Initially we will offer this

definition: 'a process whereby accountants use their knowledge of accounting rules to

manipulate the figures reported in the accounts of a business'.

To investigate the ethical issues raised by creative accounting we will:

•

•

•

•

•

Explore some definitions of creative accounting

Consider the various ways in which creative accounting can be undertaken.

Explore the range of reasons for a company's directors to engage in creative accounting.

Review the ethical issues that arise in creative accounting.

Report on surveys of auditors' perceptions of creative accounting in the UK, Spain and

New Zealand.

THE ETHICS OF CREATIVE ACCOUNTING

INTRODUCTION

The term 'creative accounting' can be defined in a number of ways. Initially we will offer this

definition: 'a process whereby accountants use their knowledge of accounting rules to

manipulate the figures reported in the accounts of a business'.

To investigate the ethical issues raised by creative accounting we will:

•

•

•

•

•

Explore some definitions of creative accounting

Consider the various ways in which creative accounting can be undertaken.

Explore the range of reasons for a company's directors to engage in creative accounting.

Review the ethical issues that arise in creative accounting.

Report on surveys of auditors' perceptions of creative accounting in the UK, Spain and

New Zealand.

DEFINITIONS

Four authors in the UK, each writing from a different perspective, have explored...