Evaluation of the Emergence Key Drivers of Creative Accounting in the Future of Financial Reporting Legitimacy

Abstract

This research aims to evaluate the emergence of key drivers of creative accounting in the future of financial reporting legitimacy. The qualitative section had 12 academics and 25 financial managers from Tehran Stock Exchange companies. This study uses matrix processes in the quantitative part. It aims to find scenarios about creative accounting. Then, it investigates the best matrix quarter on the legitimacy of future financial reporting by companies. The qualitative research findings are based on 12 expert interviews. A framework suitable for 3 overarching themes was used. It shows 6 organizing themes and 26 basic themes. The quantitative part identified 4 matrix quadrants. They were based on the axes of governance and internal control drives. The most important scenario is in the second quadrant of the Tyrannicide Matrix. It concerns the weakness of structural centralization in internal control. This scenario links to the key drivers of the rise of creative accounting. It affects the ethical legitimacy of financial reporting. This study shows that internal control is key to financial performance. It can improve adherence to stakeholders' rights by filtering out deviations in operations and financial reports. But, when managers influence internal auditors, their independence decreases. This harms the effectiveness of this key internal control process

Keywords

• creative accounting
• financial reporting legitimacy
• scenario planning