An Analysis of the Practices of Creative Accounting, Implications and Prevention among Money Deposit Banks in Northeast Nigeria

Abstract

The study empirically examines the practice of creative accounting, implications and prevention among money deposit banks in Nigeria. Survey research design was adopted and questionnaire was used to elicit information from branch managers, accountants and auditors of the selected money deposit banks operating in Yola, Jalingo and Gombe metropolis of Adamawa, Taraba and Gombe States, Nigeria. The data collected were analysed using ANOVA to test the hypotheses raised in the study. The findings of the study revealed that the Nigerian money deposit banks practice creative accounting with the main aim of attracting more investors, and the practice of creative accounting has a significant effect on the market share price, which consequently, affects the economic decision making of the users of financial statement. Furthermore, the study revealed that the adoption of IFRS by banks has significantly reduced the practice of creative accounting among money deposit banks in Nigeria. Based on the above findings, the study recommends that the practice of creative accounting should be discouraged because it is unethical. Regulatory bodies and professional bodies should adopt strict measures to stop the practice. This can be achieved through reducing the degree of choice of accounting policies and professional judgement in determining the method of measurement, criteria for recognition, and even the definition of the accounting entity.
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