Wednesday, June 22, 2016

fraudulent definition at Financial Statement Fraud

Fraudulent definition in fraud cases:


what does fraudulent mean

Many people asks what is Fraudulent definition and what does fraudulent mean in business?

Fraudulent definition at the financial statement fraud is the deliberate misrepresentation of the financial condition of an enterprise accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statements to deceive financial statement users.

Note that fraudulent definition in financial statement fraud, much like all types of fraud, is an intentional act. As stated in the International Standard on Auditing (ISA) 240, The Auditor’s Responsibility Relating to Fraud in an Audit of Financial statements, fraudulent definition is “misstatements in the financial statements can arise from error or fraud. The distinguishing factor between error and fraud is whether the underlying action that results in the misstatement of the financial statements is intentional or unintentional.

Fraudulent definition in financial statement fraud is usually a means to an end rather than an end in itself. We can define fraudulently acts when people, for example, “cook the books”, they might be doing it to “buy more time” to quietly fix business problems that prevent their company from achieving its expected earnings or complying with loan covenants. It might also be done to obtain or renew financing that would not be granted, or would be smaller, if honest financial statements were provided. We can also understand what does fraudulent mean if people who are intent on profiting from crime might commit financial statement fraud to obtain loans they can then siphon off for personal gain or to inflate the price of the company’s shares, allowing them to sell their holdings or exercise stock options at a profit, or even obtain bonus money calculated based on sales or profits. However, fraudulent definition in many past financial statement fraud cases, the perpetrators have gained little or nothing personally in financial terms.

Instead, the focus appears to have been preserving their status as the organization's leaders, a status that might have been lost had the real financial results been published promptly.

Fraudulent definition in financial statement fraud almost always involves overstating assets, revenues, and profits and understating liabilities, expenses, and losses. However, sometimes the opposite result is desired. Define fraudulently acts for example, understating assets or revenue might lead to a smaller tax liability for the company. Alternatively, a fraudster might wish to play down over-budget results in a good year in order to help make up for any shortcomings during the subsequent year.

After the fraudulent definition, financial statements are the responsibility of the organization’s management. Accordingly, fraudulent definition in financial statement fraud is typically committed by someone in a managerial role who not only has the ability to alter the financial statements, but also has an incentive to do so. Since fraud investigations are typically conducted or overseen by management, financial statement fraud cases often persist for a long time before the whistle is blown and the fraud is discovered.

Abdo Mounir

About Abdo Mounir -

Senior Manager and fraud examiner in mining industry. Head the investigations related to fraud. My role includes driving the culture of integrity And ethics within the Company by conducting regular fraud investigations.

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