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The Definition Of The Accounting Fraud And How To Identify It

When the accounting fraud is mentioned, it normally indicates that some intentional manipulation has been undertaken on a firm’s bookkeeping records. In many of the cases, this action is driven by the intention of depicting a company that has a better financial performance than the situation on the ground. Prominent examples of the areas that accounting may have taken place include the expenses under recording, revenues of sales that have been exaggerated, failure to divulge information regarding certain risky investments and falsifying the liquidity of a business through the consolidation of the debt that is short and long term.

One of the tell tales that some level of accounting fraud is taking place in your organization is when you notice that is an unexplained switch of lifestyle by the staff that work in your finance department. You will find that the staff are in opulent lifestyles that cannot be sustained by the level of earnings that they are getting.

If you notice that the financial numbers have a similar pattern you could be dealing with case of accounting fraud in your company. When specialists are performing the forensic accounting, this is a misnomer that they encounter all the time.

When the person charged with the responsibility of reconciling the bank statements of your organization is also a signatory to your cheques, this is a fertile ground where the accounting fraud will thrive. It will be a step in the right direction if those tasks are assigned to different members of staff as their sensitive characteristics can facilitate the perpetration of the fraud.

In the event that one of your employees is being viewed as one that has a controlling disposition, it is a valid reason to be suspicious. As well such a person is likely to act in ways that you consider as secretive. In most cases you are going to find out that such a behavior is meant to conceal activities of accounting fraud that could be taking place.

One warning sign that points you to the existence of the accounting fraud in your business is if people who have some level relationship between are put together o work in the finance department. This will not only encourage collusion but the workers will be able to bypass the relevant checks and balances.

In the event that you notice that your accountant is often working after hours, you should be wary as accounting fraud could be in the offing. You should be suspicious as well if the staff is carrying some of the work home. It is important to vet and compare accountants that you are hiring for the purpose of establishing that they are of impeccable character.