Find the word definition

Longman Dictionary of Contemporary English
creative accounting
noun
EXAMPLES FROM CORPUS
▪ The profession's worst problem is creative accounting.
Wiktionary
creative accounting

n. (context business euphemistic sometimes humorous English) financial accounting practices which are usually not explicitly illegal, but which are unorthodox, imaginative, usually misleading, and of questionable ethics.

Wikipedia
Creative accounting

Creative accounting is a euphemism referring to accounting practices that may follow the letter of the rules of standard accounting practices, but deviate from the spirit of those rules. They are characterized by excessive complication and the use of novel ways of characterizing income, assets, or liabilities and the intent to influence readers towards the interpretations desired by the authors. The terms "innovative" or "aggressive" are also sometimes used. Other synonyms include Cooking the books and Enronomics.

The term as generally understood refers to systematic misrepresentation of the true income and assets of corporations or other organizations. "Creative accounting" has been at the root of a number of accounting scandals, and many proposals for accounting reform – usually centering on an updated analysis of capital and factors of production that would correctly reflect how value is added.

Newspaper and television journalists have hypothesized that the stock market downturn of 2002 was precipitated by reports of "accounting irregularities" at Enron, Worldcom, and other firms in the United States.

One commonly accepted incentive for the systemic over-reporting of corporate income which came to light in 2002 was the granting of stock options as part of executive compensation packages. Since stock prices reflect earning reports, stock options could be most profitably exercised when income is exaggerated, and the stock can be sold at an inflated profit.

The most notable activist is Abraham Briloff ( professor emeritus of CUNY Baruch) who for years wrote a column for Barron's that constantly analyzed breaches of ethics and audit professionalism among CPA firms. His book is called Unaccountable Accounting. The profession, in turn, was not kind to Dr. Briloff but much of what he advocated has been forced on the industry in the wake of the Enron scandal (See Sarbanes-Oxley).

According to critic David Ehrenstein, the term "creative accounting" was first used in 1968 in the film The Producers by Mel Brooks.

Usage examples of "creative accounting".

Oh, I'd have to make sure that he got a fair return on his money, but if things got tight, the duke had no idea what a modern engineer can do with creative accounting.

If it ties in with SPINNAKER, well, maybe there's been some creative accounting on the part of the Soviet Army.

Oh, I'd have to make sure that he got a fair return on his -money, but if things got tight, the duke had no idea what a modern engineer can do with creative accounting.

Hattie's additional rake-offs from the royalties were probably covered by creative accounting.

It was just some creative accounting to kosher away money for Fiona's operations in the East.