ABSTRACT

Abstract

An accountant applies his creative skill while reporting the activities of his firm by using most suitable accounting bases. However, the literature is inconclusive about whether Creative Accounting (CA) is ethical or not. This study compared theoretical and practical perspectives about CA to identify areas to streamline accounting principles and reduce diversities of professional judgment. Content analysis of Annual Reports (AR) of Nigerian banks was carried out through disclosure indices. The scores, which rarely change from 2000-2011 are high in mandatory disclosure while scores in voluntary disclosure are low. A few of the banks conceal their negative net assets by changing account format to another one prescribed by CAMA since disclosure regulation did not specifically require disclosure of net assets. Flexibility in the choice of accounting bases exists even in highly regulated accounting environment. Therefore, regulators should be proactive in curbing abuse of accounting policy choice.

Keywords: Ethical Issues; Creative Accounting; Banks; Disclosure Regulation.