Date of Publication


Document Type

Master's Thesis

Degree Name

Master of Science in Accountancy

Subject Categories



Ramon V. Del Rosario College of Business



Thesis Adviser

Divina M. Edralin

Defense Panel Chair

Corazon C. Subido

Defense Panel Member

Cesar C. Rufino
Wilfredo A. Baltazar


Attacks on the professionalism of auditors and accountants following corporate collapse are now commonplace worldwide. Suddenly, the accounting professions and its CPAs integrity has been questioned. These sorry strings of shameful events have cast doubts on a once honored profession. All, because of creative accounting. This study was undertaken to determine the nature of earnings management as a form of creative accounting. It discussed about the opportunities that prompted many companies to commit these so-called accounting irregularities which brought about widespread abandonment of corporate ethics that shamefully eroded the quality of financial reporting. With a spate of these accounting scandals, the public was fed the notion that manipulating the books is all what accountants do. As a result, the accounting professions integrity lost out to these illusions. The study specifically aimed to determine the perceptions of selected accounting educators in the Philippines on earnings management, in terms of its compliance with GAAP, motivations and objectives, ethical considerations, and possible detection. There were 205 respondents, all accounting educators, who represented various schools in the Philippines. The findings of the study revealed that the accounting educators have different perceptions as to the classification of earnings management in terms of its compliance with GAAP. In contrast, the accounting educators perceptions are generally in agreement with the Accounting Rules as to their classification of the various earnings management techniques. Using the one-way analysis of variance, the analysis revealed that the accounting educators are generally in agreement as to the motivations and objectives of earnings management. As to its ethical consideration, the results of the survey revealed that 59% of the accounting educators considered earnings management ethical as compared to the 38% who thought otherwise. And for those who thought that earnings management was unethical, conflict of interest was cited highest among the ethical problems, followed by client proposal to manipulate and client proposal to evade tax respectively. As to the possible detection of earnings management, the accounting educators gave 182 possible detection techniques. The ranking, from the highest percentage to the lowest are as follows: High likelihood conditions, days statistics, trend analysis or analytical review, and footnote review. Based on the results and discussions, several recommendations were provided in order to lessen the use of these accounting irregularities. Foremost to these recommendations were addressed to the ASC and the SEC, the primary accounting standard setting bodies in the Philippines. These recommendations include: (1) to provide for more effective rules of corporate governance to ensure the independence and integrity of financial reports; (2) to clean up and improve the present accounting standards by making them clear, pertinent and timely; and (3) to provide accountants with unified accounting principles to minimize, if not eliminate, opportunities for accountants to practice creative accounting.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

1 computer optical disc ; 4 3/4 in.


Accounting; Management; Accounting teachers

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