Financial Statement Fraud and Revenue Recognition Fraud Essay

Financial Statement deceit and Revenue Recognition Fraud - Essay ExampleWe can define financial fraud as an intentional act to mislead people through manipulated financial financial statements for personal gain (Bank Negara Malaysia 1). Financial fraud is crime infra civil law and involves complex financial transactions conducted by white-collar business professionals with a miserable intention (Bank Negara Malaysia 1). Nevertheless, financial fraud derives numerous loses on the global economy and on the mention corporations where many companies collapse due to financial frauds. Additionally, financial fraud demeans investor confidence in financial report and lowers the efficiency of corporate governance. A financial statement fraud refers to an intentional misrepresentation of financial culture that the corporation presents to the public. Notably, ill-timed revenue recognition, failure to record incurred liabilities, and failure to disclose contingent liabilities are the n early prevalent financial statement frauds (Bradford 1). Cases of financial statement fraud are on the increase and the economical crisis catalyzes the problems. Nevertheless, most of the financial statement frauds relate to revenues recognition while accounting errors take the other proportion. As such, internal and external auditors should understand the dynamics of revenue recognition fraud and institute proper measures to fit financial fraud. Ideally, financial statement fraud and revenue recognition fraud relate to financial fraud. rendering Financial statement fraud refers to an intentional misrepresentation, misstatement, or omission of financial statement data for the spirit of deceiving the public and creating a false impression of an organizations financial strength (Colby 1). Notably, financial statement fraud is an ample challenge in the global market as corporations seek to stalk investors to continue investing in the corporation. Moreover, corporations engage in financial statement fraud for purposes of securing bank approvals for financing and satisfy the shareholders interests (Bradford 1). Ideally, the top management plays the major role in a financial statement fraud since they care and authorize the preparation of financial statements. There are different forms of financial statement fraud in the global market where the initiators will use distinct systems of manipulation to maintain the appearance of the financial statement fraud. The most common types of financial statement fraud include manipulation of liabilities, illicit recognition of revenues and expenses, faulty asset valuation, improper disclosures (Pinkasovitch 1) on financial statements, and fictitious sales (Colby 2). However, manipulation of revenue is the most dominant form of financial statement fraud. This includes the posting of sales prior to payment while the manipulation of expenses includes the capitalisation of normal operating expenses (Bradford 1). On the oth er hand, the manipulation of liabilities relates to failure to record regular expenses while improper disclosures relates to misrepresentation of the companys financial status (Bradford 1). An overstatement of current assets on financial statements leads to improper assets and defines financial statement fraud (Colby 2).