Creative Accounting Practices in the Indian Corporate Sector : An Empirical Study

By and large, every set of published accounts in the corporate world have been based on books of accounts, which have been gently cooked or completely roasted. Shockingly, few "loopholes" in the accounting "standards" provide enough room for the use of "Creative Accounting (CA)" practices. Thus, CA practices does not provide a "true and fair" view of the FS(s), since lot of "crunching" of financial numbers is done, within the purview of applicable laws and prevailing accounting standards. Recently, the use of CA has become a controversial issue since there are parties, both in favor and against, the use of such practices.As part of study, a questionnaire-based survey methodology was used, 14 specific research questions were asked, and 120 questionnaires were distributed to the preparers "and users" of the company FS(s). Finally, 85 responses from the participants were collected and analyzed using the percentage and frequencies of respondents. The study revealed that the practice of CA is always a deliberate attempt to gain undue advantage for accountants, managers and companies. Therefore, strong punitive measures should be promptly taken against all those found culpable in the act of CA. We recommend that "effective rules and regulation of accounting, audit and CG practices should be put in places, within the corporate-sector, to forestall the negative incidence of CA practices in India."