Financial Statement Fraud and Revenue Recognition Fraud Essay

Financial Statement player and Revenue Recognition Fraud - Essay ExampleWe can define fiscal fraud as an intentional act to deceive people through manipulated financial lines for personal attain (Bank Negara Malaysia 1). Financial fraud is crime under civil law and involves complex financial transactions conducted by white-collar business professionals with a reprehensible intention (Bank Negara Malaysia 1). Nevertheless, financial fraud derives numerous loses on the global economy and on the reference corporations where many companies collapse due to financial frauds. Additionally, financial fraud demeans investor confidence in financial reporting and lowers the efficiency of corporate governance. A financial literary argument fraud refers to an intentional misrepresentation of financial tuition that the corporation presents to the public. Notably, improper revenue enhancement recognition, failure to record incurred liabilities, and failure to disclose contingent liabilities be the most dominant financial statement frauds (Bradford 1). Cases of financial statement fraud are on the increase and the economic crisis catalyzes the problems. Nevertheless, most of the financial statement frauds relate to revenues recognition while accounting errors take the other proportion. As such, internal and external auditors should understand the dynamics of revenue recognition fraud and institute proper measures to curb financial fraud. Ideally, financial statement fraud and revenue recognition fraud relate to financial fraud. Definition Financial statement fraud refers to an intentional misrepresentation, misstatement, or omission of financial statement data for the conception of deceiving the public and creating a false impression of an organizations financial strength (Colby 1). Notably, financial statement fraud is an enormous challenge in the global market as corporations seek to stalk investors to continue investing in the corporation. Moreover, corporations en gage in financial statement fraud for purposes of securing bank approvals for financing and satisfy the shareholders interests (Bradford 1). Ideally, the top management plays the major role in a financial statement fraud since they supervise and authorize the preparation of financial statements. There are different forms of financial statement fraud in the global market where the initiators will use distinct systems of manipulation to maintain the appearance of the financial statement fraud. The most common types of financial statement fraud include manipulation of liabilities, improper recognition of revenues and expenses, improper asset valuation, improper disclosures (Pinkasovitch 1) on financial statements, and fictive sales (Colby 2). However, manipulation of revenue is the most dominant form of financial statement fraud. This includes the posting of sales prior to payment while the manipulation of expenses includes the capitalisation of normal operating expenses (Bradford 1). On the other hand, the manipulation of liabilities relates to failure to record regular expenses while improper disclosures relates to misrepresentation of the companys financial office (Bradford 1). An overstatement of current assets on financial statements leads to improper assets and defines financial statement fraud (Colby 2).