Page 173 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes 14.8 Financial Statements Frauds

In recent years financial statement fraud is a major problem for most of the companies. It is
observed that people in positions of power within organizations sometimes intentionally
mislead investors and creditors with deliberately inaccurate financial statements. The financial
statements frauds include the following:
The falsification, alteration or manipulation of material financial records
Material, intentional omissions or misrepresentations of events, transactions, accounts, or
other vital information used in preparation of financial statements
Deliberate misapplication of accounting principles, policies, and procedures used to
measure, recognise, report, and disclose economic events and business transactions

Intentional omissions of disclosures or presentation of inadequate disclosures regarding
accounting principles and policies and related financial amount

Did u know? What are the key activities performed by forensic accountants to detect frauds?
Activities usually carried out by forensic accountants involve:

Investigating and analysing financial evidence
Developing computerised applications to assist in the analysis and presentation of
financial evidence

Communicating their findings in the form of reports, exhibits and collections of
documents
Assisting in legal proceedings, including testifying in courts, as an expert witness
and preparing visual aids to support trial evidence
Self Assessment

Fill in the blanks:
12. A …………….has to analyse, interpret, summarise and present complex financial and
business-related issues for investigation.
13. It is observed that people in positions of power within organizations sometimes
intentionally mislead investors and creditors with …………inaccurate financial statements.

Task Give some examples of cyber crime in India.

14.9 Summary

The term forensic accounting is concerned with the detection and prevention of business
fraud and related white-collar crimes.
Forensic accounting is the specialized practice area of accounting.

The term ‘Forensic’ means “suitable for use in Court,” and it is to that standard and
potential outcome that forensic accountants generally have to work.

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