Creative Accounting Law and Legal Definition

Creative Accounting is a term which refers to systematic misrepresentation of the true income and assets of corporations or other organizations. Creative accounting and earnings management are euphemisms referring to accounting practices that may follow the letter of the rules of standard accounting practices, but certainly 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.