From the course: Accounting Foundations: Internal Controls
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Fraud: Theft and fraudulent financial reporting
From the course: Accounting Foundations: Internal Controls
Fraud: Theft and fraudulent financial reporting
- Accounting errors result when unintentional mistakes are made. Accounting disagreements result when different people arrive at different conclusions based on the same set of facts. Accounting fraud results from intentional misstatements, lies, theft. Fraudulent financial reporting occurs when desperate managers choose to intentionally manipulate the financial statements to serve their own purposes. Financial misappropriation occurs when managers or employees use their inside position to steal resources from the company. Let's first talk about financial misappropriation or embezzlement which are polite labels for stealing. Let's say that Innocent Company makes a payment of $900 to XYZ Real Estate Management Company to pay for the rent on a branch office location. But in this case, there is no branch location and XYZ Real Estate Management Company is a fake company set up by one of the accountants working for Innocent…
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