How to Stop Creative Accounting

In accounting area, there are two main meaning of creative accounting. One is to cheat or to behave unethical with interested parties by taking the advantages of loopholes of accounting records. Second is to make accounting process more enjoyable and productive. This second type meaning is used in accounting teaching.

But in this content, we take first type definition of creative accounting.  

Following is the steps to stop creative accounting:-

1^st Step: To Use Unique System of Accounting

When employees of accounting department of company does not use the unique system of accounting, then there is chance of creative accounting. Result may be inflated for getting personal gain. There is less chance of creative accounting in unique system.

2^nd Step: To Do Internal Audit

If company has real interest to stop creative accounting in his company, it can make internal audit department who audits company’s accounting department. This department fastly check whether company’s accounting department is involve in creative accounting or not. It is fast

3^rd Step: To Make Month End Check List

To make month end check list is the one of important and third step for stopping creative accounting. In month ends balance sheet, income statement, sales report and expenses report will help to compare previous month report. By doing this, if there is any doubt of cheating or unethical behaviour by any employee, it can be stopped by becoming new Enron scandal.