A Literature Review on Creative Accounting in Governments from Various Countries

The aim of this research is to collect evidence of creative accounting in local governments from various countries. This research is interesting to carry out because this research is the first to examine earnings management carried out by governments. Second, this research can add to scientific studies, especially financial accounting, through empirical evidence about earnings management carried out in governments around the world. This research uses an interpretive approach by systematically reviewing several articles discussing earnings management in the public sector. It is concluded that term numbers manipulation in financial statements in the government sector has different terms. Some governments use creative accounting, surplus-deficit management, and earnings management. Theories that are widely used are public choice theory and agency theory. Meanwhile, the factors that influence the government to carry out creative accounting are political, regional government characteristics, and financial performance.