Resumen
Financial reporting system has been developed to provide reliable information for its users. However, regardless of how much is striving that financial reporting system provides quality information, yet there are certain circumstances that can lead to misleading financial statements. The occurrence of irregularities is affected by the following factors: complex economic reality, the accounting policies and estimates, participants in the process of financial statements preparation and presentation, specific processes within the recognition and measurement of specific positions in financial statements etc. Creative accounting is performed transformation of the financial statements of what is really and what the subject want to show using the existing rules and/or ignoring some of them. It can affect the amount of reported profit, the amount of reported net assets and the amount of reported net cash flows from operating activities. In this paper, the term creative accounting will be used for labeling of accounting acts made in order to present the desired and not the real picture of cash flows from operating activities. Key Words: financial reporting, creative accounting, cash flows, operating activities.