World Journal of Social Sciences Vol. 1. No. 3. July 2011. Pp. 1-15

Cosmetic Accounting Practices in Developing Countries: Bangladesh Perspectives
Asif Mahbub Karim 1 , Rehana Fowzia 2 and Md. Mamunur Rashid
Cosmetic accounting is a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business. This study expresses the views of External Auditors, Internal Auditors, and the Accountants on causes, techniques, effects and solution for Cosmetic Accounting. To achieve these purposes total 108 respondents have been surveyed. Findings from descriptive statistics reveal that the perceptions of three categories respondents are different about the various aspects of cosmetic accounting .It also shows the opinions of internal auditors, external auditors and accountants raised some concerns as to whether these circumstances will last.
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Field of Research: Accounting. Keywords: Cosmetic Accounting, Accountants.

External

Auditor,

Internal

Auditor,

1. Introduction
Creative accounting is referred to also as income smoothing, earnings management, earnings smoothing, financial engineering and cosmetic accounting. The preferred term in the USA, and consequently in most of the literature on the subject is „earnings management‟, but in Europe the preferred term is „creative accounting‟ and so this is the term that will be used in this paper. It should be recognized that some accounting manipulation involves primarily balance sheet rather than earnings management. Definitions of creative accounting vary, and include „Is the deliberate dampening of fluctuations about “some level of earnings considered being normal for the firm” (Barnea et al. 1976). „Is any action on the part of management which affects reported income and which provides no true economic advantage to the organization and may in