The Impact Of Creative Accounting Practices On The Credibility Of Financial Reports Of Commercial Banks: The Moderating Role Of Audit Committee

Abstract

The study aimed to find the impact of creative accounting practices on the credibility of financial reports of commercial banks, and to know the moderating role of audit committee on the relationship between creative accounting and the credibility of financial reports, where the creative accounting practices were measured in each of (financial position statement, income statement, equity statement, cash flow statement). In order to achieve the objectives of this study, a questionnaire was designed and distributed to the study sample observations represented by (financial managers, accountants, audit managers and internal auditors) working for Jordanian commercial banks listed on Amman Stock Exchange. Therefore, 129 observations were adopted and their answers were introduced for statistical analysis based on the SPSS programme.

The results showed that there is an impact of creative accounting practices in each of (financial position statement, income statement, equity statement, cash flow statement) on the credibility of financial reports in commercial banks. Also, the findings indicated that there is an impact of audit committee in moderating the relationship between creative accounting practices and the credibility of financial reports in commercial banks.

The study concluded a set of recommendations, the most of which are: Administration of commercial banks listed on Amman Stock Exchange should follow strict policies to discover creative accounting methods in the financial position statement and develop deterrent laws based on the issuance of penalties and sanctions to those who practice such practices.