Karan Khatri
Quick Summary
What is Accounting Fraud? Accounting fraud is the intentional manipulation of financial statements to create a window dressing of a companys financial health. It involves an employee, account or the organization itself and is misleading to investors and shareholders. A company can falsify its fin
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FAQ :
Accounting fraud is the intentional falsification of financial statements to create a misleading impression of a company's financial standing, deceiving investors and shareholders.
Companies can commit accounting fraud by overstating revenue or assets, failing to record expenses, or under-recording liabilities, all of which distort the true financial picture.
The Fraud Triangle is a model that explains why people commit fraud, consisting of three elements: pressure, opportunity, and rationalisation.
Pressure refers to the motivation to commit fraud, stemming from personal financial issues like debt or the need to maintain a certain lifestyle, or workplace problems like revenue shortfalls.
Opportunity is the chance to commit fraud, where an individual sees a clear way to abuse their position to solve a perceived problem secretly and without being discovered.
Rationalisation is the process by which fraudsters justify their actions, often by viewing themselves as victims of circumstance or by externalising blame, such as to a dishonest employer.
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