Abstract:

Creative accounting is a phenomenon that has generated considerable controversy because, both in practice and in the academic literature, it is associated either with the legitimate application of permissible accounting methods or with the manipulation of financial information. The purpose of this paper is to examine the essence of creative accounting, identify the differences between its legitimate application and aggressive accounting, and assess the significance of the flexibility provided by accounting regulations for the quality of financial reporting. The study is based on a review of the relevant literature, an analysis of applicable accounting regulations, and a case study of the CD Projekt Group. The findings demonstrate that an appropriately designed accounting policy, developed in accordance with accounting regulations, enables a more faithful representation of an entity's financial position, financial performance, and overall economic situation. Using the example of CD Projekt, the paper illustrates the impact of capitalising development costs on the application of the matching principle and on the quality of financial information disclosed in financial statements.
The results confirm that creative accounting, understood as the conscious application of legally permissible accounting methods, may serve as an instrument for improving both the usefulness and reliability of financial reporting. At the same time, the paper emphasises the necessity of clearly distinguishing creative accounting from aggressive accounting and accounting fraud, whose primary objective is the deliberate misrepresentation of an entity's economic position.