Easy Proposal Thesis Example | Topics and Well Written Essays - 500 words

Easy - Thesis Proposal Example Interviews and questionnaires will be used to obtain primary data, while financial statements will be used to obtain secondary data. The increased collapse of companies led to an increase in the number of legislation passed to protect businesses and the interests of shareholders (AICPA 6). This has led to an increase in creative accounting, which is the manipulation of financial statements by accountants using their knowledge, in a way that is within the legal restrictions (Beidleman 655). Without rotation of auditors, and with accountants being under the command of managers, they can manipulate them to produce financial statements that do not portray the true and fair view of a firm’s financial performance (Hanno 135). There are various reasons advanced to explain why firms engage in creative accounting. These include a company trying to hide its poor performance in a particular year, or when it is avoiding takeovers (DeZoort, Hermanson and Houston 179). Accounting standards have been revised to try curbing unethical issues in financial statement preparation and improving their integrity. However, managers and accountants have found ways of navigating this regulation; remain within the confines of the law, and produce financial statement that do not reflect the actual position of a company. This has led to such companies experiencing financial strain and others collapsing. The purpose of this study is to find out the impacts that creative accounting has on a company’s financial health. The study will give an insight on the consequences of creative accounting and the negative effects the practice may have on a company’s on-going and future performance. Various scholars have studied different aspects of creative accounting. According to Beasley, creative accounting is used to influence market expectations and increase consumers’ and investors’ confidence in a firm (450).