Some implications of the use of the creative accounting in applying of the principles of prudence and continuity in the development and disclosure of financial information

Abstract

An approach to some implications of the use of creative accounting in applying the principles of

prudence and continuity in the development and disclosure of financial information is used. This research

is conducted appealing to literary history and interviews with accounting experts in GAAP and creative

accounting; from that follows its historical, conceptual and analytical approach, leading to constitute a

theoretical contribution on the subject for the accounting profession. The results show that the creative

accounting practices affect negatively both the development and disclosure of financial information in the

light of these two principles, and imply firstly, that most of the accounting authors confer negative nuances

framed under the illegality and the lack of ethics to this informal practice. The pragmatic implication of

using the creative accounting compromises the continuity, which can be interrupted when it does not show

negative tendencies and by the obsolescence of the application of the principle of prudence, due to the

prevalence of the desired economic scenarios instead of the real ones