ABSTRACT
Accounting statements have a comforting appearance of complete accuracy because precise figures are given for each of the items reported in the profit and loss account and balance sheet, and because the use of double entry causes the principal accounting statements to articulate with one another and balance. The economic reality is very different and, despite improvements designed to meet earlier criticisms, published accounts remain under attack. In the early part of the twentieth century their informational value suffered because of obscurity, excessive summarisation, the use of secret reserves, the failure to publish a profit and loss account, and the absence of group accounts. Today's perceived deficiencies include the lack of forecast information, the omission of assets and liabilities from the balance sheet, the failure to take account of changing prices, and the increasing use of what has become known as ‘creative accounting’, i.e. the deliberate selection of accounting practices designed to transmit a message which management wants user groups to believe, rather than to portray what has actually happened.
