Discussion on contemporary issue in accounting

contemporary issue in accounting
‘The Evolving Dimensions of The Accounting Profession and the 21st Century Expectations’(Jeremiah & Daferighe, 2019)The dimension of the accountancy profession is undergoing an increasingly expanding andunpunctuated global evolution. These 21st-century twists, however, tend to pose an identity threat to the profession. The much-celebrated software substitution of the traditional roles of the Accountant coupled with the apparent professional cross-carpeting of non-accountants aided by these emerging digital initiatives appears to ‘take-over’ the seat of the Accountant. The following roles were identified for the discussion.Task 1: Explain minimum of ONE new skill set required for a modern Accountant from the list above orfrom your own choice.(5 marks: Word count- 300-400)‘Two accounting theories that help create the system investors and managers use today’ : Positive and Normative Accounting Theories.Task 2: Identify a positive theory and a normative theory from the list above (Text 1 or Text 2) and justify your answer by referring to the differences between two theories.(5 marks: Word count- 300-400) Case Scenario: 3AbdulSalam LLC’s financial position as of 30th September 2020 is as follows:The company management has been decided the following ‘creative accounting’ measures:Already answered :Task (3) Redraft the Statement of Financial Position as of 30th September 2020 to reflect the aboveCreative Accounting measures.(6 marks)The answer is :Task (4) Comment on the findings of task (3) above and make relevant recommendations referring to thebelow mentioned teaching nexus.(4 marks: Word count- 300-400)The Practice of Creative Accounting on the Jordanian Banking Sector: A Case Study in the Northern Region (Al-Dalabih, 2017)Please you have to write in very simple words
also all the requirement should be solved
for each question its written how many words should be
you should write intext and out text reference are very important
there should not be any similarity because it will be in turn tin so write in your way
Task three i already solved but task four not yet so you have to use the pdf which I will share to write the comment and recommendation and they should be separate in paragraph (for example recommendation separate and comment are separate. only you have to taje them fro the case sttudy please

Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017 129
Australian Academy of Accounting and
Finance Review (AAAFR)
ISSN (Online) 2205-6688
ISSN (Print) 2205-6742
The Practice of Creative Accounting on the Jordanian
Banking Sector: A Case Study in the Northern Region
Firas A. N. Al-Dalabih
Department of Accountancy, Irbid National University, Jordan
1. Introduction
Accounting manipulation creates when the managers try to mislead the financial information of the
organization to change the performance according to their benefits (Diana and Madalina, 2008).
The term creative accounting is considered as deceptive accounting, it is widely used to describe
the accounting techniques that allow corporations to report inaccurate financial results of their business
activities (Akenbor and Ibanichuka, 2012).
In view of the prevailing conditions in the business world and the recourse of many departments of
companies to improve the financial situation in terms of profitability or in terms of financial position to
achieve self-objectives, these departments resort to use the methods of creative accounting through the
variety of accounting alternatives that can be relied on in the preparation published financial statements,
which adversely affect the validity of those statements.
Due to the seriousness of this phenomenon, especially in banks as a main aspect in the financial
institutions because of dealing with depositors’ funds and a very large financial leverage due to the
large size of deposits compared to their capital, it is necessary to give the subject great importance
in the bank sector to determine the extent to which banks are practice creative accounting and profit
management.
Hence, this study came to examine the practice of creative accounting on the Jordanian banking sector.
1.1. Statement of problem
Some companies, through their management, owners, or stakeholders, resort to practice certain
methods of creative accounting to achieve personal goals by influencing profitability data or financial
Abstract
This study aims to identify the practice of creative accounting on the Jordanian banking sector. The sample of
this study comprised 150 selected from three banks in the northern region of Jordan. These banks are Cairo
Amman Bank, Arab Bank, and Jordan Bank, whereas a questionnaire survey was designed and distributed to
them. A total of 121 questionnaires were retrieved that are valid for statistical analysis formed about 80.7% of
overall distributed questionnaires; and the questionnaires have been analyzed using SPSS statistical software.
The results of the study indicate that there is a statistical significant relationship between the practice of creative
accounting and both the profitability and the size of the Jordanian commercial banks. This study recommended
the Jordanian commercial banks to protect their profitability through different policy instead of practice creative
accounting.
Keywords: Creative Accounting; Jordanian Commercial Bank; Profitability; Size
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130 Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017
position, in general, to appear in a manner consistent with their illegal purposes. Therefore, it will
reflect negatively on the credibility of data and reliability of the users for financial statements, both
those who were outside the company or within, and thus the collapse of that company in the money
market by declaring bankruptcy, or involvement in legal cases.
Based on the above, this study attempts to find answers to the following questions:
1. What are the motives behind the practice of creative accounting in the Jordanian commercial
banks?
2. Is there a relationship between the practice of creative accounting and the profitability of the
Jordanian commercial banks?
3. Is there a relationship between the practice of creative accounting and the size of the Jordanian
commercial banks?
4. What are the procedures that can help in curb the practice of creative accounting in the Jordanian
commercial banks?
1.2. Importance of the study
As a result of the existence of many accountants and auditors who have the ability to innovate and
manipulate the accounting numbers under their responsibility, this leads to an increase in the phenomenon
of creative accounting, which ignores transparency in the disclosure of financial statements and credibility
in the presentation of financial statements, which necessitates finding reasons for such phenomenon and
propose possible solutions to reduce them and to adjust the ethics of the accounting profession.
The importance of this study is also determined by its application in the banking sector, which is
the most important financial sectors of the economy in Jordan, and within the researcher’s knowledge,
there are no studies related to the practice of creative accounting applied to this sector.
1.3. Study objectives
This research aims to achieve the following objectives:
1. Determining the motive behind the practice of creative accounting in the Jordanian commercial banks.
2. Illustrate the relationship between the practice of creative accounting and the profitability of the
Jordanian commercial banks.
3. Illustrate the relationship between the practice of creative accounting and the size of the Jordanian
commercial banks.
4. To determine the procedures that can help in curb the practice of creative accounting in the Jordanian
commercial banks.
1.4. Hypotheses of the study
We can develop the following hypotheses:
Ha1: There is a set of motives of practicing creative accounting in Jordanian commercial banks.
Ha2: There is a statistical significant relationship between the practice of creative accounting and the
profitability of the Jordanian commercial banks.
Ha3: There is a statistical significant relationship between the practice of creative accounting and the
size of the Jordanian commercial banks.
Ha4: There is a set of procedures that can help in curb the practice of creative accounting in the
Jordanian commercial banks.
2. Literature Review
Much has been written on creative accounting; for example,
Nyabuti et al. (2016) examined the influence of creative accounting practices on the financial
performance in Kenya.
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Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017 131
The sample of the study comprised 50 people represent the top management of public limited
companies that is the CEO, directors, top managers, and accountants, whom work in 30 public
companies listed in the Nairobi Securities Exchange.
The results found that creative accounting practices have a significant effect on the financial
performance of a company. The results found also that most companies used creative accounting
practices abusively hence resulting in most collapses of many firms.
Bora and Saha (2016) highlighted the creative accounting in financial reporting and its ethical
perspective. To accomplish the purpose of the study, it was depended on theoretical approach through
reviewing the literature.
The results indicated that creative accounting is a highly unethical practice which has been found
to be exercised by majority of the corporate houses.
Hussein et al. (2015) studied the creative accounting practices and its area, techniques, reasons, and
method of prevention through reviewed available articles related to the creative accounting practices,
where a total of 22 articles during the period 2002-2015 were reviewed and analyzed.
The findings reveled that financial statements are the most violated and manipulated area by
creative accounting practices. In addition, the findings reveal that the most prevalent technique for the
creative accounting practices is the manipulation of information to the stakeholders and shareholders. It
was found also that there are differences between private and public companies regarding the reason of
creative accounting, where the private companies use it to hide its income and reduce tax, while public
companies use it to boost the price of shares.
Bhasin (2015) highlighted the creative accounting practices in the Indian corporate sector. This
study depends on the qualitative approach through conduct a survey and distributed questionnaires to a
random sample comprise 120 people represent the preparers and users of corporate financial statement,
as well as, University Teachers of Accounting.
The results revealed that the practice of creative accounting is always a deliberate attempt to gain
undue advantage for accountants, managers, and companies.
Tassadaq and Malik (2015) examined the relationship between creative accounting and financial
reporting in Pakistan. This study was depended on a quantitative research design and data collected from
industrial sector through questionnaires which distributed to the sample of professionals comprised 120
professionals.
The results found that the companies in Pakistan are involved in frauds or scandals because of
several factors such as unethical behaviors, agency problem, and non-professional attitude. Moreover,
the results found that creative accounting plays significant role in financial reporting through negatively
correlated.
Ijeoma (2014) aimed to know the effect of creative accounting on the Nigerian banking industry.
To achieve the goal of the study, a questionnaire has been built and distributed to the sample of the
study which represent 50 employees whom works in three banks in Nigeria.
The results indicated a significant impact for the creative accounting on banks distress in Nigeria.
The results also found that the major reason for creative accounting practices in the Nigerian
banking industry was to inflate the operating costs to reduce exposure to taxes, and the other reasons
include: To help maintain or boost the share price by reducing the apparent levels of borrowing, making
the company appear subject to less risk and of a good profit trend, and to effect changes in accounting
policies.
Micah and Chinwe (2014) study the impact of creative accounting on organizational effectiveness
in Nigeria. An empirical survey was carried out to achieve the goal of the study, where data collected
from manufacturing firms through questionnaires. Sample size was 140 people represent the middle
and top management staff of 14 quoted manufacturing firms from Nigeria Stock Exchange.
The result revealed a significant relationship exists between income smoothing and profitability
and market share, besides that, the results found that there is a significant relationship between
regulatory flexibility and profitability and market share.
Yadav (2014) investigated the creative accounting from professional prospective. To achieve the
goal of the study, a questionnaire was made and distributed to the sample of the study which comprised
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132 Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017
60 people including professional chartered accountants, chartered accountants, and company secretary
student’s accountants from India, college teachers who have immense understanding of the various
accounting methods of the real world.
The results indicated a positive relation between creative accounting and both involvement of
outside directors and internal control mechanism.
While it was found that there is no relation between creative accounting and product and market
competition and capital market technique.
Sanusi and Izedonmi (2014) conducted research on creative accounting practices in Nigerian
commercial banks.
The sample of this study comprised the most experienced/senior 42 Managers/Assistant Managers
and 42 Accountants/Assistant Accountants drawn from 21 consolidated commercial banks head office
branches in Lagos state, and questionnaire was used to collect the data from the sample of study.
The findings illustrated that the major reasons for creative accounting practices in Nigerian
commercial banks are order as following: To boost the market value of shares; users of accounting
information are adversely affected by this practice of creative accounting; and streamlining accounting
principles and rules to reduce diversities of professional judgment in financial reporting will help
minimize creative accounting practices.
Akenbor and Ibanichuka (2012) investigated the creative accounting practices in the Nigerian
banking industry. To achieve the purpose of the study, the survey method of research design was
adopted, where a questionnaire has been the major instrument which used for generating the primary
data from the sample of study which comprised 25 managers and 25 accountants drawn from the 25
recapitalized banks currently operating in the Federal Capital Territory – Abuja.
The results indicated a negative relationship between users of accounting information and the
practice of creative accounting, it was found also that boost the market value of shares is the major
reason for creative accounting practices in Nigerian banks.
3. Theoretical Framework
3.1. Concept of creative accounting
Creative accounting is as old as the accounting profession itself, although the accounting scholars
have over the years carried out several researches to understand and address it, it is still considered as
a problem, and it continues to be practiced by various corporations in the world (Kamau et al., 2016).
Creative accounting refers to the use of accounting knowledge to influence the reported figures,
whereas remaining within the jurisdiction of accounting rules and laws, so that instead of showing the
actual performance or position of the company, they reflect what the management wants to tell the
stakeholders (Yadav, 2014. p. 38).
Hence, from the definition, we can note that creative accounting related to profit and revenue.
In general, the management’s objective is to achieve the highest profit and earning and if some
circumstances prevail to reach this objective then the management of the firm maybe changes its
accounting method, deferring or accelerating expense or revenue transactions, or use any policy which
fraud in financial statements and reporting to show the earnings at a certain level in financial reporting
standards.
3.2. Creative accounting forms
Earning management and income smoothing consider as the most form of creative accounting. We can
define them as follow:
1. Income smoothing is a conscious behavior which reduces periodic income fluctuations. One of
the income smoothing goals is to increase the return (Garizi et al., 2011). Income smoothing refers
to a conscious behavior which occurs for the purpose of decreasing fluctuations of income cycles
(Venouss et al., 2006. p. 179).
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Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017 133
2. Earnings management may be defined as reasonable and legal management decision-making and
reporting intended to achieve stable and predictable financial results (Rahman et al., 2013). Kelly
(2011) illustrates that the factors that affect the flow of earnings management are pattern of earning
management, good earning management, bad earning management, motivations of earning management, and accounting implication.
4. Methodology
To accomplish the purpose of the study, a questionnaire is made with 30 questions that measure and
test the study hypotheses.
4.1. Selection of the sample
Random sampling technique was used to determine the sample size of 150 selected from three banks
in the northern region of Jordan. These banks are Cairo Amman Bank, Arab Bank, and Jordan Bank.
The questionnaire was distributed among the sample of study including managers, internal
auditors, and accountants. A total of 121questionnaires were retrieved that are valid for statistical
analysis, formed about 80.7% of overall distributed questionnaires.
4.2. Statistical techniques used
The collected data analyzed through using SPSS statistical software, we used the following test:
• Reliability analysis.
• Descriptive analysis include: Frequencies, percent, mean and standard deviation.
• One sample t-test: To test the study hypotheses.
4.3. Data Analyses
4.3.1. Reliability analysis
From the Table 1, we can note that the range of Cronbach’s alpha was between 85.65% and
92.52%, and this value for all the questions was 94.73%. Moreover, these values indicate very good
results because it indicates strong correlation between the questions.
4.3.2. Descriptive of sample member
From the Table 2, we can note the following:
Gender: 74.4% of the study sample is male, in contrast, the female ratio was 25.6%.
Years of working in the bank: The majority of the respondents were from the years of working
in the bank 5 to <10 years, and their percent was 34.7%, followed by individuals with 15 years and
more with the percent 27.3%, followed by individuals 1 to <5 years with the percent 16.9%. Finally,
the sample members whose years of working in the bank were 10 to <15 years and their percent was
12.4%.
Table 1: Reliability analysis
Questions Cronbach’s alpha
Motives for practicing creative accounting 0.9252
The practice of creative accounting and the profitability 0.8873
The practice of creative accounting and the size 0.8565
Procedures that can help in curb the practice of creative accounting 0.8814
Total questions 0.9473
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134 Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017
Qualification: The results show that most of the members of the sample are of Bachelor
qualification, with percent 69.4%, followed by individuals, who had Master qualification, and their
percent were 22.3%, and finally, individuals with Doctorate qualification, and their percent were 8.3%.
Job: The results show that most of the respondents are in the position of Accountant, their percent
were 45.5%, followed by individuals who occupy the position of Bank manager with percent 23.1%,
then those who work as a Internal Auditor position with percent of 14%, followed by individuals whose
position Director of Accounts Section with percent of 11.6%, and finally, individuals who occupy the
position of Head of Audit Department and their percent was 5.8%.
4.3.3. Discussing the study questions
To discuss the study questions, we compute the mean and the standard deviation for the answers of
sample’s member and the five-level “questionnaire” study (Likert) was used as follows:
1 = Very disagree
2 = Disagree
3 = Middle agree
4 = Agree
5 = Very agree
Depended on:
Mean (1 to <2.33) refers to disagreement.
Mean (2.33 to <3.66) refers to middle agreement.
Mean (3.66-5) refers to agreement.
4.3.3.1. First dimension – motives for practicing creative accounting
From the Table 3, we can note the following:
• The range of mean for the first dimension (motives for practicing creative accounting) was between
agreement and middle agreement, where the lowest mean was 3.5785 refer to “reducing profits and revenues and increasing expenses to reduce exposure to taxes,” and this indicated middle
Table 2: Distribution of sample members according to personal and job variables (n=121)
Variable Level Frequency (%)
Gender Male 90 (74.4)
Female 31 (25.6)
Total 121 (100.0)
Years of working in the bank 1 to<5 years 31 (25.6)
5 to<10 years 42 (34.7)
10 to<15 years 15 (12.4)
15 years and more 33 (27.3)
Total 121 (100.0)
Qualification Bachelor 84 (69.4)
Master 27 (22.3)
Doctorate 10 (8.3)
Total 121 (100.0)
Job Bank manager 28 (23.1)
Director of accounts section 14 (11.6)
Head of audit department 7 (5.8)
Internal auditor 17 (14)
Accountant 55 (45.5)
Total 121 (100.0)
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Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017 135
agreement about this aspect, and the highest mean was 4.4545, and this refers to “protect the bank
from falling into bankruptcy,” and this indicated agreement about this aspect.
• The average of the mean was about 4.024 and this indicated agreement about this dimension.
4.3.3.2. Second dimension – the practice of creative accounting and the profitability
From the Table 4, we can note the following:
• The mean for the second dimension (the practice of creative accounting and the profitability) was
directed toward agreement, where the lowest mean was 3.8347 refer to “low rate of return on property
leads to increased creative accounting practice,” and this indicated agreement about this aspect, and
the highest mean was 4.2397, and this refers to “the low ratio of operating expenses to total expenses
leads to increased creative accounting practice,” and this indicated agreement about this aspect.
• The average of the mean was about 4.023, and this indicated agreement about this dimension.
4.3.3.3. Third dimension – the practice of creative accounting and the size
From the Table 5, we can note the following:
• The range of mean for the third dimension (the practice of creative accounting and the size) was
between agreement and middle agreement, where the lowest mean was 3.5455 refer to “the high
value of average tax payments leads to increased creative accounting practice,” and this indicated
middle agreement about this aspect and the highest mean was 4.00, and this refers to “the high proportion of tax payments to sales leads to increased creative accounting practice,” and this indicated
agreement about this aspect.
• The average of the mean was about 3.747 and this indicated agreement about this dimension.
Table 3: Mean for member sample about first dimension (n=121)
Nominal
value
Questions Mean±SD
1 Attract more customers 4.3471±0.64175
2 Protect the bank from falling into bankruptcy 4.4545±0.51640
3 Capitalization of capital expenditure that does not meet
capitalization requirements
4.1488±0.73780
4 Valuation of the securities portfolio through the adoption of
unfair market prices
4.0992±0.72347
5 Demonstrate a stable level of profits achieved by the bank and
hide the amount of losses realized
3.9421±0.83962
6 Maintaining the bank’s credit standing and reputation 4.3058±0.49738
7 Impact on the share price and maximize the financial value of
the bank’s shares in the financial market
4.2562±0.54051
8 Reducing profits and revenues and increasing expenses to
reduce exposure to taxes
3.5785±1.09356
9 Non-inclusion of outstanding premiums during the current year
of long-term loans within current liabilities to improve liquidity
ratios
3.7851±1.05835
10 Eliminate compliance with accounting rules, measurement
alternatives, and disclosure requirements for the transfer of
financial statements
3.7025±0.95433
11 Delay the exit of real information to the market, which leads to
increase the opportunity of the bank’s management to benefit
from the internal knowledge of the bank’s news
3.6446±1.18223
Average 4.024036±0.798673
SD: Standard deviation
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136 Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017
4.3.3.4. Fourth dimension – procedures that can help in curb the practice of creative accounting
• The mean for the fourth dimension (procedures that can help in curb the practice of creative
accounting) was directed toward agreement, where the lowest mean was 3.6612 refer to “relying
on the auditors with experience and efficiency in the various accounting methods,” and this indicated agreement about this aspect, and the highest mean was 4.0744, and this refers to “support the
supervisory role of the audit committees in the Jordanian commercial banks,” and this indicated
agreement about this aspect.
• The average of the mean was about (3.929) and this indicated agreement about this dimension
(Table 6).
4.3.4. Test of hypotheses
To test the hypotheses, we use one sample t-test and the results were as follow:
Ha1: There is a set of motives of practicing creative accounting in Jordanian commercial banks.
Table 4: Mean for member sample about second dimension (n=121)
Nominal
value
Questions Mean±SD
12 A low rate of return on assets leads to increased creative
accounting practice
4.0000±0.70711
13 Low rate of return on property leads to increased creative
accounting practice
3.8347±0.88832
14 A lower rate of earnings per share leads to increased creative
accounting practice
4.0909±0.80623
15 The low ratio of operating expenses to total expenses leads to
increased creative accounting practice
4.2397±0.68343
16 The lower ratio of total reserves to net income leads to increased
creative accounting practice
3.9504±0.84510
17 High debt ratio leads to increased creative accounting practice 4.0248±0.71254
Average 4.023417±0.773788
SD: Standard deviation
Table 5: Mean for member sample about third dimension (n=121)
Nominal
value
Questions Mean±SD
18 The high proportion of tax payments to sales leads to increased
creative accounting practice
4.0000±0.81650
19 The higher nominal value of the stock leads to increased
practice of creative accounting
3.7521±0.68655
20 High volume trading leads to increased creative accounting
practice
3.8182±0.75277
21 The high value of average tax payments leads to increased
creative accounting practice
3.5455±0.77460
22 The rise in total assets leads to increased creative accounting
practice
3.6860±1.16928
23 An increase in total reserves leads to increased practice of
creative accounting
3.6777±0.77690
Average 3.746583±0.829433
SD: Standard deviation
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From the Table 7, we can note that there is a set of motives of practicing creative accounting in
Jordanian commercial banks, where the significant value was 0.000, and this value is significant at
α ≤ 0.005. Hence, we reject null hypothesis and accept the alternative hypothesis that says: There
is a set of motives of practicing creative accounting in Jordanian commercial banks.
Ha2: There is a statistical significant relationship between the practice of creative accounting and
the profitability of the Jordanian commercial banks.
From the Table 8, we can note that there is a statistical significant relationship between the practice
of creative accounting and the profitability, where the significant value was 0.000, and this value is
significant at α ≤ 0.005. Hence, we reject null hypothesis, and accept the alternative hypothesis that
says: There is a statistical significant relationship between the practice of creative accounting and
the profitability of the Jordanian commercial banks.
This result consequent with Nyabuti et al. (2016) that revealed that creative accounting practices
have a significant effect on the financial performance of a company in Kenya, and Micah and
Chinwe (2014) that found a significant relationship between income smoothing and profitability.
Ha3: There is a statistical significant relationship between the practice of creative accounting and
the size of the Jordanian commercial banks.
From the Table 9, we can note that there is a statistical significant relationship between the practice of creative accounting and the size, where the significant value was 0.000, and this value is
Table 6: Mean for member sample about fourth dimension (n=121)
Nominal
value
Questions Mean±SD
24 Provide the full independence for the internal auditors which
necessary to curb the practice of creative accounting
4.0083±0.88030
25 The audit department of the bank shall continuously supervise
the work of the internal auditors to curb the practice of creative
accounting
3.7438±0.76951
26 Relying on the auditors with experience and efficiency in the
various accounting methods
3.6612±0.70183
27 Judicial accounting legislation in all listed companies 3.9669±0.86539
28 Support the supervisory role of the audit committees in the
Jordanian commercial banks
4.0744±0.98459
29 Activate the role of external auditors in disclosing the practice of
creative accounting
4.0413±0.75715
30 Apply deterrent punishments to internal auditors who are
negligent in disclosing the practice of creative accounting
4.0083±0.79053
Average 3.929171±0.821329
SD: Standard deviation
Table 7: Results of one sample t-test for motives of practicing creative accounting
Item t-value Mean Sig.
Motives for practicing creative accounting 17.901 1.0240 0.000
Table 8: Results of one sample t-test for relationship between the practice of creative
accounting and the profitability
Item t-value Mean Sig.
Relationship between the practice of creative accounting and
the profitability
18.103 1.0234 0.000
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138 Australian Academy of Accounting and Finance Review | Volume 3 • Issue 3 • July 2017
significant at α ≤ 0.005. Hence, we reject null hypothesis and accept the alternative hypothesis that
says: There is a statistical significant relationship between the practice of creative accounting and
the size of the Jordanian commercial banks.
Ha4: There is a set of procedures that can help in curb, the practice of creative accounting in the
Jordanian commercial banks.
From the Table 10, we can note that there is a set of procedures that can help in curb the practice
of creative accounting, where the significant value was 0.000, and this value is significant at α ≤ 0.005.
Hence, we reject null hypothesis and accept the alternative hypothesis that says: There is a set of
procedures that can help in curb the practice of creative accounting in the Jordanian commercial banks.
5. Results
This study aimed to examine the practice of creative accounting on the Jordanian banking sector in the
northern region and the results were as follow:
1. There is a set of motives of practicing creative accounting in Jordanian commercial banks, and the most
important motive was to protect the bank from falling into bankruptcy, with highest mean (4.4545),
then the motive of attract more customers, and its mean was 4.3471, then the motive of maintaining the
bank’s credit standing and reputation, with mean of 4.3058, but the lowest motive was reducing profits
and revenues and increasing expenses to reduce exposure to taxes, with mean of 3.5785.
2. There is a statistical significant relationship between the practice of creative accounting and the
profitability of the Jordanian commercial banks, and this result indicates that the Jordanian commercial banks practice the creative accounting to enhance their profitability to have well position.
3. There is a statistical significant relationship between the practice of creative accounting and the size
of the Jordanian commercial banks, and this result indicates that the Jordanian commercial banks
practice the creative accounting to reduce the percent of tax.
4. There is a set of procedures that can help in curb the practice of creative accounting in the Jordanian
commercial banks, and the most important procedure was support the supervisory role of the audit
committees in the Jordanian commercial banks, with highest mean (4.0744), then activate the role
of external auditors in disclosing the practice of creative accounting, with mean of 4.0413, and the
lowest procedure that can help in curb the practice of creative accounting in the Jordanian commercial banks according to the sample of the study was relying on the auditors with experience and
efficiency in the various accounting methods, with the lowest mean (3.6612).
6. Recommendations
This study recommends the following recommendations:
1. Jordanian commercial banks must protect their profitability through different policy instead of
practice creative accounting.
2. Jordanian commercial banks have to support the supervisory role of the audit committees.
Table 9: Results of one sample t-test for relationship between the practice of creative
accounting and the size
Item t-value Mean Sig.
Relationship between the practice of creative accounting and the
size
12.750 0.7466 0.000
Table 10: Results of one sample t-test for procedures that can help in curb the practice of
creative accounting
Item t-value Mean Sig.
Procedures that can help in curb the practice of creative accounting 16.187 0.9292 0.000
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3. It is very important to activate the role of external auditors in disclosing the practice of creative
accounting.
4. It is very important to apply deterrent punishments to internal auditors who are negligent in disclosing the practice of creative accounting.
5. It is very important to make periodic supervision on the work of the internal auditors by the audit
department of the bank.
References
Akenbor, C.O., Ibanichuka, E.A.L. (2012), Creative accounting practices in Nigerian banks. An International
Multidisciplinary Journal, Ethiopia, 6(3), 23-41.
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