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Detection of Creative Accounting in Agricultural Enterprises

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  • Bína, Dana
  • Zelenková, Michaela
  • Rain, Tomáš

Abstract

The paper deals with the detection of creative accounting of enterprises in the agricultural sector to verify whether creative accounting is used to an increased extent by those farming enterprises that have been granted a bank loan; and then whether there is an effort to manipulate financial statements mainly in micro-small or medium and large enterprises. Four mathematical-financial models were applied to 150 accounting units with primarily agricultural activity to verify the hypotheses. Beneish M-score, Jones model, Altman Z-score and IN05 model were used. An increased risk of using creative accounting methods was identified in 28% of the investigated companies on average during the monitored period. Still, the assumption that the size of the accounting unit has a significant effect on the use of creative accounting methods was not proven. However, a higher motivation to manipulate financial statements can be expected in smaller accounting units due to their less stable financial position confirmed Altman Z-score and IN05 models. At the same time, a higher probability of using and a tendency to use creative accounting techniques were found among units that were granted a bank loan, which stems from the need to secure and maintain sufficient financing for business activities.

Suggested Citation

  • Bína, Dana & Zelenková, Michaela & Rain, Tomáš, 2023. "Detection of Creative Accounting in Agricultural Enterprises," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 15(3), September.
    • Handle: RePEc:ags:aolpei:348887
    DOI: 10.22004/ag.econ.348887
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    References listed on IDEAS

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    4. Essien Ekerette Akpanuko & Ntiedo John Umoren, 2018. "The influence of creative accounting on the credibility of accounting reports," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 16(2), pages 292-310, June.
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