Abstract
The purpose of this case article is to bridge the gap between
theory and practice of financial reporting by analyzing the reporting
practices from an accountant’s perspective. True and fair financial reporting
is the basic requirement for achieving the objectives if Islamic financial
system. Importantly, what causes the accountants to mismark the financial
status of the companies has been spotlighted. It depicts the impact of
aggressive revenue recognition, outright fraud, failing to accrue liability,
misclassification of operating and non operating income and expenses,
understatement and capitalization of expenses on financial statements. The
management manipulates financial statements to have good impression
about its performance and to shoe profitability, better return on assets, return
on equity and debt ratios.
Study provides evidence for the mechanics used for manipulation
and provides valuable input for the motives for aggressive reporting and
outright fraud. It highlights the importance of accounting model to help
and trace the manipulated financial statements for efficient investment
decisions. The results of the study cannot be generalized to all countries
because of difference in the adoption of international accounting standards,
international financial reporting standards, generally accepted accounting
principles and AAOFI standards in some cases.
Muhammad Akhtar, Mubashar Hassan Zia, Faisal Shehzad. (2018) True and Fair View of Financial Reporting Practices: Accountants’ Perspective, Journal of Islamic Business and Management, Volume 8, Issue S.
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