QUESTION 6 (15 MARKS)

Creative accounting is a systematic perversion of returns and properties of companies. The

practice can be considered legal or illegal depending on its purpose.

(Mohd Ali, Haron, Othman & Hasnan 2020)

Required:

(i)

Do you agree with the above statement? Discuss your answers by illustrating how

creative accounting practices becomes legal and illegal. You need to provide examples

to support your answers.

(9 Marks)

(ii) Give suggestions on how to overcome creative accounting practices.

(6 Marks)

(Total: 15 Marks)

QUESTION 7 (15 MARKS)

Value creation process is based on intellectual capital or intangibles rather than tangible

assets in todays business environment. Therefore, measuring and reporting of intellectual

capital for different issues has become a hotly debated issue in the literature. Currently, it is

fair to say that existing financial reporting framework has an inadequacy in disclosing

intellectual capital and there is no consensus on a method to measure intellectual capital

correctly as well as a generally accepted model has not been emerged in the literature yet..

(Atalay, Gokten & Turkcan 2018)

Required:

(i)

Define intellectual capital reporting and discuss critically the truth of the statements

above.

(9 Marks)

(ii) Give suggestions on how to overcome issues and problems in intellectual capital

reporting.

(6 Marks)

(Total: 15 Marks)