Any practice that attempts to make a situation look better than it really is. It has been used extensively by accountants to improve the look of balance sheets. For example, banks used to call in their short-term loans and delay making payments at the end of their financial years, in order to show spuriously high cash balances. Another example is when a company borrows cash from an associated undertaking to disguise a short-term liquidity problem. These practices now fall within the remit of the Accounting Standards Board. See creative accounting; off-balance-sheet finance.
Subjects: Business and Management.