Accounting fraud, corporate profit performance can constitute deliberate and fraudulent fraud of sales and / or expenses records, in order to ensure that it appears better than the actual How many companies do What is that:
- There is no mention of prepaid expenses or other supplementary assets
- does not indicate a specific classification of current assets and / or liabilities
- collapse short term and long term debt to one amount.
Recording excessive sales revenue is the most common method of accounting fraud. The business may ship the product to customers who did not order, knowing that their customers will return the product after the end of the year. Until returns are made, the business records the shipment as if it were actual sales. We will also fill in the channels involved in the business. It provides products to dealers and end customers what they do not really want, but the business returns to the products whose dealers and customers are against objecting to the early delivery of the product also the delay is recorded We accepted avoidance from customers who were made up for revenue from sales of these offsets until the end of consolidated fiscal year
Another way for a business to commit an accounting fraud is to record expenses such as not recording depreciation expenses. Or you can choose not to record all cost of sales of sales made during the project period. Although this will increase gross margin, the inventory assets of the business includes products that are not actually in stock because they were delivered to customers.
The business may also choose not to record the loss of assets that should be recognized as such uncollectible accounts receivable, or it may be that co-business is also responsible for making its own balance sheet discreet , You may not record the full responsibility for the cost. Therefore, its benefit will be exaggerated.
What is an independent auditor?
The Independent CPA Corporate Auditor is like a referee in the field of financial reporting. CPA comes in, audits business accounting systems and methods, and gives a report to attach to the company's financial statements. Public enterprises are audited by an independent Certified Public Accountant Office and they know that the audit report adds credibility to financial reporting, so any individuals
The auditor will decide whether the accounting method of the company complies with generally accepted accounting principles (GAAP). Generally everything is in place and the financial report is a reliable document. However, sometimes the corporate auditor swings the flags of yellow and red. Because some indicators of potential troubles are business ability to continue normal business, low cash balance, unpaid delinquent liability, or business covered
The auditor objected to the client's accounting methods and reporting practices to ensure that the financial statements conform to accounting standards and not misleading In fact, the word "fairly presented" It is the exact word used in the auditor's report.
A good auditor needs to know not only the technical know-how but also how to make the client's accounting methods tighter. His job is to become a representative of shareholders and other users of business finance reports. It strictly maintains GAAP and is current to Corporate Auditor to not slide any irregularities.
Recently, there are a number of well-known companies engaged in accounting fraud, whose fraud was not discovered by CPA's auditor. Enron is one of these companies. Because it destroyed the audit evidence, in this case, the audit corporation, Arthur - Anderson, was convicted of jurisdiction.
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