Accounting fraud is a deliberate manipulation of accounting records in order to make a company's financial performance or condition seem better than it actually is.
Examples of Accounting Fraud:
- Merging short and long term debt into one amount to improve the perceived liquidity of the company
- Failing to disclose risky investments or “creative” accounting practices
- Over-recording sales revenue
- Under-recording expenses (i.e. depreciation expense)
High Profile Fraud Cases
Unfortunately, there have been too many examples of accounting fraud in the United States. Most recently, the U.S. Securities and Exchange Commission has uncovered the following:
- Xerox – Falsifying financial results for five years, boosting income by $1.5 billion
- Freddie Mac – Understating earnings
- Halliburton – Improper booking of cost overruns
- Lehman Brothers – Failure to disclose an accounting maneuver that resulted in short-term loans being reported as sales
Although these high profile cases directly affected a relatively small percentage of the population, the impact on Wall Street eventually affects Main Street as we have seen in recent years. BatesCarter works with small to mid-size businesses, if you believe your company has become a victim of fraud, please reach out to our team of accounting professionals.