Creative accounting is the term used to describe the deliberate manipulation of reported accounting information with the intention to mislead users of the accounts. Creative accounting tries to take advantage of the use of subjective judgement used in preparing accounts. The ability to use creative accounting has been significantly reduced in recent years following the issue of a range of more prescriptive and detailed accounting standards. (See accounting standards, window-dressing).
The term used to indicate accounting and financial reporting practices which, whilst not illegal, are intended to convey a circumstance or position that is either misleading or illusory, creating a position of profitability or soundness that may not be totally valid.