It's high time that creative accounting practices were curbed and their root causes traced. The factors related to accounting practices mentioned in this article have a lasting impact irrespective of time and place.

Given one Balance Sheet and 10 Accountants, one can draw 11 Net profits out of it.

That statement sounds interesting and tempting, but these accounting gimmicks could smash up a company's credibility irrespective of its business and size. Mostly, creative accounting is practiced under the supervision of corporate heads assisted by their auditors. Since a decade, we have seen many cases where companies such as Enron, WorldCom, etc., were caught red-handed practicing creative accounting. Studies revealed that fraud in the US costs business more than $400 bn annually; whereas, street crimes only cost $4 bn annually. This is definitely an area of concern, which will cripple the world in the days to come if not contained.

Till date, we have come across an infinite number of creative cases for which various reasons are cited. These reasons can be broadly classified into three business environmental factors such as the aspect of culture (corporate culture), size of the countries, and flexible accounting regulations.

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