CREATIVE ACCOUNTING AND AN APPLICATION ON BANKS

Abstract

Creative accounting, unlike the positive accomodation that it has awakened, seems to be a concept that gives considerable damage to the economies and especially the accounting and auditing companies that shake the world. The financial system is formed by the combination of different institutions with complex structures and functions, and one of the cornerstones of this system is the banks. Since the total accruals, which are the most representative indicator used in the uncovering of creative accounting applications, will not give meaningful results in the banking sector, the loan loss provisions (LLP), which is a special accrual item, is used as indicator of creative accounting applications and the data of the banks operating at BIST financial sector between 2009 and 2016 are taken into consideration. The purpose of this study is to reveal whether it is shown differently from profit in the Turkish banking sector by using the account of lost credit provisions. In the bull's-eye, the two fundamentally tested effects (LLP and earnings before tax and provisions / LLP and capital management), only earnings before tax and provisions have been found to have a significant relationship with LLP and income smoothing implementations.