The Impact of Using Creative Accounting Methods in the Companies’ Financial Statements on the Procedures of Income Tax Estimators to Discover it: An Applied Study on Income Tax Estimators in Palestine

Abstract

This study aims to spot the light on the techniques and practices of creative accounting in the financial statements of companies in Palestine, and the procedures made by income tax estimators for companies subject to income tax in Palestine to reduce these practices, from the viewpoint of the estimators in Palestine. To achieve the objectives of the study and verify its hypothesis, the analytical descriptive approach was used due to its suitability to the nature of the study. The questionnaire was also used to collect information from the study sample, which consisted of the 120 income tax estimators in Palestine, 103 questionnaires were retrieved and filled out. The questionnaires were analyzed and tested using the Smart-Pls4 statistical software.
The study showed that there is implementation of procedures by income tax estimators in Palestine that reveal and limit creative accounting practices in assets in the statement of financial position, and revenues in the income statement of companies in Palestine. And that there is a failure from income tax estimators in Palestine to take measures that reveal and limit creative accounting practices in costs in the income statement, and liabilities and owners’ equity in the statement of financial position.
The study recommended the General Administration of Income Tax in Palestine to find an effective and efficient examination system capable of discovering creative accounting practices aimed to prevent tax evasion, using the latest techniques and methods that limit or reduce the negative effects caused by creative accounting practices on the financial statements of Palestinian firms, and make an efforts by the professional authorities (the Council of the Auditing Profession, the Association of Palestinian Auditors, the Bureau of Financial and Administrative Control, the Palestinian Association of Accountants and Auditors) to set some controls and develop legislation to limit creative accounting practices in a manner consistent with the Palestinian work environment, and to issue firm laws that include deterrent penalties for cases Manipulation and misrepresentation of the financial statements to limit the use of illegal techniques in creative accounting methods.
Keywords: Creative Accounting, Taxable Income, Income Tax, Financial Statements, Companies in Palestine.