Background and Effects of Creative Accounting Practices in the Health Sector in Latin America During the Pandemic Era

Abstract

The COVID-19 pandemic marked a before and after for the global economy, and one of the most affected sectors was the health sector, where rising costs in medical care, protective equipment and infrastructure, coupled with a decrease in income from other regular services, led a large part of health centers such as public and private hospitals to resort to unethical accounting practices for the manipulation of their financial information (creative accounting). These events of financial depression and relaxation of controls during the health emergency allowed the creation of a "favorable" environment to distort financial statements through techniques such as premature recording of income, undervaluation of expenses, among others, to evade taxes and take advantage of the benefits imposed by governments to promote humanitarian aid and prioritize health care. The purpose of this article is to highlight the most common creative accounting practices that were applied in the health sector in Latin America during the COVID-19 pandemic and the consequent effects it had on the economy and on the governmental control of the countries in the region for the detection of these practices.