What Is Fraudulent Financial Reporting?
In essence, fraudulent financial statements are an act that intentionally misleads users of financial statements. Misreporting financial statement data is its manifestation. Inflated profits are the most commonly used method. A company from grassroots managers to senior managers may be involved in fraudulent financial statements; accounting firms and certified public accountants also bear corresponding legal responsibility for the results of fraudulent financial statements of customers.
Fraudulent financial statements
Right!
- Chinese name
- Fraudulent financial statements
- Types of
- Overstate income, understate expenses, etc.
- Harm
- Put the company's financial situation at
- In essence, fraudulent financial statements are an act that intentionally misleads users of financial statements. Misreporting financial statement data is its manifestation. Inflated profits are the most commonly used method. A company from grassroots managers to senior managers may be involved in fraudulent financial statements; accounting firms and certified public accountants also bear corresponding legal responsibility for the results of fraudulent financial statements of customers.
- 1. Defects in the internal performance evaluation system of enterprises provide soil for report fraud
- As the content and link of management, the internal performance evaluation of an enterprise is important to all levels of the enterprise. Without performance evaluation, there will be no competition for excellence, reward and diligence, and incentive and restraint mechanisms will not be implemented, and the company will have no vitality and vitality; without the performance evaluation system, the internal responsibility, power and profit of the company cannot be combined. There is no motivation and pressure on employees
- 1. Keep the company's financial position at
- Develop realistic internal performance evaluation indicators
- When formulating internal performance evaluation and short-term financial goals, the company's senior managers should conduct in-depth investigations, formulate and issue practicable profit budget indicators, so that they can be achieved and challenging; in formulating internal incentives and subordinates, The personnel promotion mechanism should be considered from a long-term perspective and comprehensively considered, and not based on the achievement of profit indicators as the sole criterion.
- Strengthening internal audit responsibility
- Internal audit is an audit performed on behalf of the manager or the board of directors. Through the inspection and testing of internal auditors, it can be ascertained whether the internal control mechanism is working well and the division of internal responsibilities is actually implemented. Auditors can also visit the site or use the Temporary access to notice to prevent the occurrence of fraud. It can also find fraud through investigation of facts and audit of books, and put forward management recommendations, so that managers can learn about and deal with the relevant information in time.
- NOTES should follow general auditing standards and professional ethics
- The purpose of the independent audit conducted by the CPA is to express opinions on the public financial reports of the trustees. However, they went to the scene to verify the report data and check the soundness of the internal control system, which helped to prevent fraud, and sometimes found fraud. Although in the routine audit, the CPA only issues opinions on whether the published financial statements of the trustees conform to the general accounting standards, and it is not necessary to disclose fraud. If the certified public accountant does not follow the general auditing standards and professional ethics during the audit, the accounting firm and the certified public accountant will not only bear the financial compensation liability, but also be subject to criminal liability. Users of financial statements are convinced that accounting firms are one of the few institutions that can recover economic losses for them. Especially when the audited unit is bankrupted and liquidated, statement users expect greater value from accounting firms. The firm is increasingly responsible for fraudulent financial statements. CPAs should follow the general auditing standards, perform necessary auditing procedures, and abide by professional ethics in the audit of financial statements to avoid the risk of fraud in financial statements. [1]