EFFECT OF CREATIVE ACCOUNTING PRACTICE ON FINANCIAL REPORTING IN NIGERIAN DEPOSIT MONEY BANK

Abstract

This study examined the effect of creative accounting practice on financial reporting in Nigerian deposit money bank. Specifically, the study intends to: ascertain if a well-designed framework of accounting regulation (IFRS) curbs creative accounting practices in corporate financial reporting in deposit money banks in Nigeria; determine whether income smoothing is the cause of bank distress in Nigeria; examine whether unethical conduct by auditors’ influence both accounting policy choice and manipulation of transaction in deposit money banks in Nigeria. Survey research design was adopted. Data were obtained from questionnaires and analyzed with five point likert’s scale and the three hypotheses formulated were tested using t-test statistical tool with aid of SPSS statistical package version 20.0. From the analysis, the study found that a well-designed framework of accounting regulation curbs creative accounting practices in corporate financial reporting and contributed to the bank distress in Nigeria. Another finding is that creative accounting practice significantly influenced both accounting policy choice and manipulation of transaction in financial reporting. Based on the findings, the researcher recommends among others that Regulatory agencies in Nigeria should draft rules that minimize the use of Judgment estimation and prediction in the treatment of certain entries in financial reporting, e.g. extra ordinary items. Another recommendation is that the adoption of one set of global financial reporting standards known as international financial reporting standard (IFRS) must be embrace by all operators of accounts or those performing an accounting duty.