FIN 657 GROUP PRESENTATION TITLE : FRAUDULENT IN FINANCIAL STATEMENT

FIN 657 GROUP PRESENTATION TITLE : FRAUDULENT IN FINANCIAL STATEMENT.

WHAT IS FRAUD???. Fraud is an intentionally deceptive action. Provide the perpetrator with an unlawful gain or deny a victim’s right..

WHERE AND HOW IT CAN HAPPENS???. Fraud involves deceit to illegally or unethically gain at the expenses In finance, fraud can take on many forms, including making false insurance claims, cooking the books, pump & dump schemes, and identity theft leading to unauthorized purchases. Fraud costs the economy billions of dollars every year, and those caught are subject to fines and jail time..

FINANCIAL STATEMENT FRAUDS. Can be deliberate over/understatement of financial statement balances in many cases to make a company appear to be in better financial condition than it really to deceive a financial statement user.

How is it Accomplished?. T. 1. IMPROPER REVENUE RECOGNITION 2. MANIPULATION OF EXPENSES 3. NON-RECOGNITION OF LIABILITIES 4. IMPROPER CASH FLOW PRESENTATION.

ENRON. EXAMPLE OF BIG ACCOUNTING FRAUD HISTORY. Arrow Slight curve.

Arrow Slight curve. PARMALAT. INCOME WAS OVERSTATED BY $500 BILLION. TOP COMPANY EXECUTIVES STOLE $150 MILLION THROUGH UNAUTHORIZED FORMS OF EXECUTIVE COMPENSATION..

HOW TO PREVENT IT??. SET AN APPROPRIATE TONE AT THE TOP. TRAIN EMPLOYEES THROUGH ORIENTATION AND REFRESH AT REGULAR INTERVALS. ENSURE ADEQUATE COMMUNICATION SO THAT EVERY EMPLOYEE KNOWS WHAT ACTIVITIES CONSTITUTE FRAUD AND THE CONSEQUENCES.

HOW TO DETECT IT BEFORE IT HAPPEN ?. PERFORM GENERAL LEDGER VERIFICATION. REVIEW TRANSACTIONS TO LOOK FOR UNUSUAL AMOUNTS, PATTERNS, OR FLUCTUATIONS IN FINANCIAL RECORDS. INQUIRE WITH INDIVIDUALS INVOLVED IN THE FINANCIAL REPORTING PROCESS ABOUT INAPPROPRIATE OR UNUSUAL ACTIVITY RELATING TO THE PROCESSING OF JOURNAL ENTRIES AND OTHER ADJUSTMENTS. REVIEW ACCOUNTING ESTIMATES FOR BIASES RESULTING IN MATERIAL MISSTATEMENT DUE TO FRAUD.

THAT’S ALL FROM US.