Controlling it is a key issue today. New research published this week explores how successful attempts to regulate creative accounting have been and how companies can still resist the regulation. The research, published as a book, Creative Accounting and the Cross-Eyed Javelin Thrower, by Dr Christopher Whelan of the University of Warwick, and Dr Doreen McBarnet of Oxford takes its title from Sir David Tweedie, Chairman of the Accounting Standards Board.
Creative accounting is very attractive to companies.
What s more, creative accounting can also claim to be perfectly legal which is why it has proved so difficult to control in the past. But, creative accounting has a downside. It often has a major adverse impact on investors, creditors, employees and others, amply demonstrated in the 1980s with the demise of companies - Maxwell Communications Corporation for example was enmeshed in various forms of creative accounting. So a new policing agency, the Financial Reporting Review Panel, has been created to police accounting and it has been armed with new weapons. It can investigate cases of alleged creative accounting and require directors to revise the accounts.