A Beginners Guide To

The Meaning Of Accounting Fraud And The Ways To Discover It

Accounting fraud refers to the methods that are employed for the purpose of manipulating the accounting records of an establishment deliberately. In majority of the scenario, this is done to give the false impression that suggest that the organization is performing better financially that it really is. Some of the instances where the accounting fraud is quite evident include the merging of a company’s long and short term liabilities for the purpose of painting its enhanced liquity,the overstating of the revenues from the sales, failing to provide the disclosure of investments that are considering as being risky and the understating of the depreciation expenses.

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. In most cases the lavish life that they are living cannot be supported by the pay that they are earning.

In the event that the figures in your finances are having a certain pattern, this could be a clear indication that accounting fraud is being undertaken by your staff. This is a practice that has always been unearthed by people undertaking forensic accounting,

If you discover that the same staff that is assigned the task of undertaking the reconciliation of the firm’s bank statements is also supposed to sign the cheques, that is a red flag that accounting fraud is being perpetrated. It is highly advisable to separate activities such as these as they conducive to the commission of the fraud.

You should be wary of a member of staff in your organization that exhibits a personality that is intended to control others. Additionally, such a staff may appear to operate in a secretive manner. Usually the reason behind such a behavior is to act as a faade to hide some level of accounting fraud that could be taking place right under your nose.

When you allow employees that are related to work in your accounting segment, accounting fraud could be taking place. The resultant effect of this scenario is that the employees will not only engage in collusion but are better placed to circumvent the regulations that have been put in place.

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. Additional you should be skeptical if there is persistent insistence by the accountant to undertake some company’s work at his home. Before you assign the employees that will be in charge of your bookkeeping section, it is imperative that you carry out a comparison of the accountants so that you are sure that they are credible.