A Study on the Role of Audit Functions on Creative Accounting Practices

Creative accounting is considered an art to manipulate the financial accounts, while remaining within the jurisdiction of accounting laws and rules to reflect what the management wants to tell the stakeholders instead of showing the actual position of the company. Due to the increasing level of competition, dearth of sustain in the market, loopholes in accounting standard and other regulations creative accounting practice is prevailing in companies. Excessive use of creative accounting led to the downfall of numerous high profile companies. The objective of the study is to make creative accounting as clear as possible with the help of review of studies conducted, to highlight the reasons for using creative accounting practices. The studies strive to empirically examine, the adoption of creative accounting methods in financial reporting structures, in the corporate sector of India and it ramification on the financial system.