THE PRACTICAL APPLICATION OF THE ACCOUNTING INFORMATION IN THE CREDIT ACTIVITY THROUGH THE ASSESSMENT OF THE CREDITWORTHINESS OF THE CREDIT APPLICANTS

Although banks have been conducting credit lending activities for centuries by using traditional credit risk assessment methods, the scientific art of credit risk management has evolved over the last few years along with the Basel agreement. The risks to which banks are being exposed when they fund societies keen on creative accounting techniques are considerable, the misleading attempts and the "production" of financial statements for a successful image in front of the bank in order to convince with a view to obtaining funding are often common practice. The consequences are particularly severe for the financing institution that will mark losses on the transaction concluded on the basis of these glossed over economic realities. That is why it is very important to look beyond this picture, to compare the image presented by the client with images of other reporting periods in order to identify changes in the accounting records techniques. It is best to understand the film of the last 2 or 3 years to grasp the reality of a society and not just the image that it has been thoroughly prepared to be shown to the bank in order to get credits.