Creative accounting: An interaction of hr and accounting

Abstract

The technological changes in HR and Accounting has been astounding and has caused an unprecedented increase in activities related to creative accounting. Human resources in any organization has the incentive to be creative and therefore they indulge into ethical or unethical ways to achieve better results for the organisation. Present paper takes into consideration the ethical dilemma of one particular category of human resources in the organization, the auditors or accounting professionals. The issue of creative accounting emerges when auditors identify loopholes in the accounting standards and use these loopholes to further their own or directors’ self-interest. And, therefore, the use of creative accounting may be seen as a potential threat to the corporate governance and organizational ethos. Irrespective of the fact that manipulation of accounts has resulted into many accounting and governance scandals in the past, use of creative accounting in preparation and presentation of financial statement is rampant. Thus, the objective of the present study is to identify the issues of creative accounting in the organizations and to analyse the extent and impact of role of internal and external auditors as crucial human resources of the organization in this context.