Topic: Fraudulent Financial Reporting
Introduction – Fraudulent Financial Reporting
Financial reporting fraud is one of the major issues in our business world. Fraudulent financial reporting intentional misstatement or omission of financial accounting information meant to mislead the depositors, creditors, especially financial statement users. Financial statement fraud can be efficient under the False Claim Act and the Dodd Fraud Act, it is when companies practice some deals, developed to cover or dispose the accounts of company to support it to stay catching to depositors.
WorldCom, Xerox, Adelphia, Parmalat, the same in these companies is that all of them are financial reporting fraudulents. During the past seven years, financial fraudulent reporting has risen harmfully. Accordingly, plenty of investors have given up the reliance on possibility of financial statements. Management fraud is commonly regarded synonymous with financial fraud by reason of manufacturing and demonstration of financial statement is management’s liability. Once fraudulent financial reporting accomplished, it is usually required for it to go ahead over time. If earnings are speeded up in the current year, they will be less in the following year. This cycle regularly adduce management to perform identical principle the next year. There are some causes for fraudulent financial reporting. One of them is pressure from owners, creditors and the markets at all. Another reason is possibilities of deceit. And one more reason is motivation and collisions of interest.
Nowadays, corporations can teach how to find out financial statement abnormalities by seeing red flags connected with fraudulent financial reporting, that regulators will possibly making use of to recognize companies to research.
Why do people accomplish fraudulent financial reporting? One reason for this is hiding...