Abstract
Study aims to contribute to the development of the external auditor's capabilities in the method of presenting the effects of creative accounting on his report, as well as demonstrating the impact of using creative accounting practices through optional entitlements have on the formulation of the external auditor's report.The problem of study lies in the question of ""How much impact of creative accounting through optional entitlements on the drafting of the auditor's report?" The study was based on the hypothesis that "there is a statistically significant impact of creative accounting through optional entitlements on the formulation of the external auditor's report", and to prove the hypothesis of study, simple linear regression analysis was used to show the impact of the creative accounting variable on the formulation of the external auditor's report through the questionnaire method, where (150) questionnaires were distributed to study community, represented by a sample of external auditors working in audit offices from the private sector and the Federal Financial Supervision Office. (138) questionnaires were recovered and (6) questionnaires were neglected, so that total questionnaires adopted in this study and subject to analysis were (132) questionnaires.Study reached several conclusions, the most important of which are: the existence of a statistically significant effect of the creative accounting variable on the formulation of the external auditor's report, and this was evident through the value of (F) of (232.450) in terms of (0.000), which is less than the level of significance (0.01), and the value of the coefficient of determination (2R) showed that the variable (creative accounting) explains (64.1%) of the variation in the impact on the formulation of the auditor's report.Study recommends the need to spread awareness among external auditors regarding the risks of practicing creative accounting on the validity of financial statements, through the establishment of scientific and educational courses and conferences by professional organizations and syndicates, as well as the need to take creative accounting into account when planning and implementing the audit process for accounting units, and also recommends the need to train and qualify external auditors to use modern means when auditing such as forecasting models and regression equations that help them study and analyze the external environment of the accounting unit. Thus identifying the risks that beset them and disclosing them in the report.
