Impact of Creative and Aggressive Accounting on the Quality of Financial Reporting in the Hospitality Industry in Zimbabwe
Keywords:
Creative accounting, Quality, Financial reports, Hospitality industry, ZimbabweAbstract
Objectives The study examined the impact of creative and aggressive accounting on the quality of financial reporting in the hospitality industry in Zimbabwe., Prior Work The study also identified the motives behind creative accounting and established the areas that are mainly affected by creative accounting in financial reporting. Approach This study adopted a mixed-methods research design, integrating both qualitative and quantitative approaches. Twenty-six semi-structured interviews were conducted, and financial statements were analyzed from five hotels which were randomly sampled. Results The study found that management uses creative accounting for their personal gain, to improve share market prices, to avoid paying taxation, to ensure that they do not fail in debt covenants, and to acquire loans from financial service providers. The study found that hotels in Zimbabwe use creative accounting methods such as altering accounting principles, asset valuation, intra-company transactions, undervaluing liabilities, and early revenue recognition. The findings further revealed that there is a significant relationship between creative accounting practices and the quality of financial reporting in the hospitality industry in Zimbabwe. Implications This suggests that those entities that practice creative accounting practices in manipulating their financial statements, jeopardize the quality of the reports, and misleading various stakeholders, hence, they should be sanctioned or forced to pay penalties. Value This study provides research-based knowledge as it is the first studies to be conducted in Zimbabwe on creative accounting in the hospitality industry in Zimbabwe.
References
Al-Natsheh, N. & Al-Okdeh, S. (2020). The impact of creative accounting methods on earnings per share. Management Science Letters, 10(4), 831-840.
Amat, O., & Gowthorpe, C. (2004). Creative accounting: nature, incidence and ethical issues.
Blazek, R. (2021). Creative accounting as a global tool for tax optimization. Behavioral Economics and Decision-Making, (97); 1-10. https://doi.org/10.1051/shsconf/20219202007
Carmona, S., & Trombetta, M. (2003). Creative accounting practices and measurement choices in the hospitality industry. Journal of Hospitality & Tourism Research, 27(2), 170-194.
Carmona, S., & Trombetta, M. (2003). Creative accounting practices and measurement choices in the hospitality industry. Journal of Hospitality & Tourism Research, 27(2), 170-194.
Dechow, P. M., & Skinner, D. J. (2000). Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons, 14(2), 235-250
Dimitrijević, D., Obradović, V., & Milutinović, S. (2018). Indicators of fraud in financial reporting in the Republic of Serbia. Teme, 42(4), 1319-1338. DOI: 10.22190/TEME1804319D
Dlamini, B. (2022). Factors influencing the use of management accounting among SMEs in emerging economies: A case of Zimbabwe. The Journal of Accounting and Management, 12(2),
Dube K. (2021). Sustainable Development Goals Localisation in the Hospitality Sector in Botswana and Zimbabwe. Sustainability, 13(15):8457. https://doi.org/10.3390/su13158457
Jan, C.L. (2021). Detection of Financial Statement Fraud Using Deep Learning for Sustainable Development of Capital Markets under Information Asymmetry. Sustainability, 13(17), 9879. DOI: 10.3390/su13179879
Jones, M. (2011). Methods of Creative Accounting and Fraud. In Jones, M. (Ed.), Creative Accounting, Fraud, and International Accounting Scandals (pp. 43-68), Chichester, UK: John Wiley & Sons, Inc.
Kamau, C.G. (2016). Effect of management practices on creative accounting among corporation listed in Nairobi. PhD. Thesis in Business Administration.
Khattab, M.S.Y. 2012. Proposed framework for activating the role of corporate governance in limiting the use of some creative accounting methods. Journal of Public Management 52: 2.
Mavengere, K.S. & Dlamini, B. (2023). Detecting probable manipulation of financial statements. Evidence from a selected Zimbabwe Stock Exchange-Listed bank. Journal Of Accounting, Finance And Auditing Studies, 9(3): 17-38. DOI: 10.32602/jafas.2023.022
Milašinović, M., Jovković, B., & Dragičević, P. (2022). COVID-19 PANDEMIC AND FRAUDULENT ACTIONS IN THE FINANCIAL STATEMENTS: THE CASE OF HOTEL COMPANIES IN THE REPUBLIC OF SERBIA . Acta Economica, 20(36), 133–154. https://doi.org/10.7251/ACE2236133M
Mulford, C. W., & Comiskey, E. M. (2011). The financial numbers game: Detecting creative accounting practices. New York: John Wiley and Sons. http//sites.google.com.site. mkjuy76.
Nyakarimi, S (2022). Probable earning manipulation and fraud in the banking sector. An empirical study from East Africa. Cogent Economics and Finance, 10(1), 2083477.
Okoughenu, S.A., Evbota, C.I. & Amughoro, O.A. (2019). Creative accounting practices and international financial reporting standards adoption in Nigeria: listed nonfinancial services companies in perspective, International Journal of Governance and Development 6 (1) (2019) 69–74.
Sanusi, B., & Izedonmi, F. (2014). Nigerian commercial banks and creative accounting practices. Journal of Mathematical finance, 4:75-83.
Schipper, K. (1989). Commentary on earnings management. Accounting Horizons, 3(4), 91-102.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Banele Dlamini, Sibonginkosi, M.C. Murisa
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
