Accounting Fraud

ACCOUNTING FRAUD, or false financial reporting, is often at the heart of the most extensive white-collar crimes. Among the examples are the Equity Funding Corporation of America, the fiscal fabrications of hundreds of savings and loan annual reports in the 1980s, and Enron Corporation. Accountants and auditors may assist in other corporate offenses by covering up evidence. For example, by making profit from labor or environmental law violations appear as legitimate income or keeping it off the records altogether.

Accurate financial statements and reports of assets and liabilities, profit or loss, are absolutely required for business and investment decisions. Accounting fraud involves falsification of financial records by overstating profits and assets, understating liabilities and debt, or hiding profit from tax authorities. The complexity of accounting practices ...