THE IMPACT OF CREATIVE ACCOUNTING OF FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS

Abstract

Financial statements ar one of the way of communicating information to users. In order to show a more favorable or strategically useful financial representation in financial statements, the flexibility provided by accounting  standards is used, which leads to the emergence of creative accounting. International Financials Reporting Standards (IFRS) lead to the emergence of creative accounting, they define general principles, but also leave management freedom of decision-making in assessing economic circumstances. The areas of application of creative accounting are most clearly revealed in the following standards: IFRS 15 on the different moment of revenue recognition, variable consideration, different measurement of contract assets and liabilities, IAS 36 on subjective assumptions for determining the discount rate when applying the discounted cash flow method, on the different moment of  recognition of impairment losses, IAS 2 on the moment of recognition of impairment losses, IFRS 9 on determining the amount of the provision for credit losses. After analyzing the financial statements of UAB ‘’Ignitis” for 2022 – 2024, it is noted that the financial indicators declared by the company are affected by the flexibility provided by IFRS, which leads to the emergence of creative accounting.