What has the ASB done about “creative accounting”?
“Creative accounting” is primarily a journalistic term; it has no official standing and no agreed definition. The ASB’s task is to improve the quality of financial statements, a task that obviously took as its starting point the standards of financial reporting that existed when the Board was established in 1990. In its Statement of Aims (1991), the ASB adopted certain guidelines for conducting its affairs. The first was “To be objective and to ensure that the information resulting from the application of accounting standards faithfully represents the underlying commercial activity. Such information should be neutral in the sense that it is free from any form of bias intended to influence users in a particular direction and should not be designed to favour any group of users or preparers.” If, for convenience, it is assumed that ‘creative’ accounting is the opposite of what the ASB favours-ie accounting that does not faithfully represent the underlying commercial activity and is not ne
