Fraudulent in Financial Reporting
It’s basically the intentional effort to misstate the information in the financial statement. The purpose behind this fraud may be to conceal the internal transactions of the financial events which benefit the fraud making employee of the company. Another reason behind making the financial statement un-transparent is to give the fruitful view of the firm to the investors with the aim of attracting them. This practice of fraud abuses the public and concerned parties like the government to avoid high tax.
In the fraudulent reporting the supporting documents are altered by the company and the financial statement is presented with the wrong information. This intentional effort gives the wrong image of the company to the general public like showing the loss situation to avoid giving the dividends to the share holders. The statement can show wrong information like showing high profit situations with the aim to attract the investors to invest in the company. Definitely they will be attracted as that particular company shows them high profits and high dividend figures paid to the existing share holders.
This fraud in the financial statement is considered to be the civil crime, with such crimes the credibility of regulatory authorities of the companies get affected. In many states, the fraud in financial statement is considered to be a serious crimes which not only harms the public who are the share holders of the company but affects the credibility of that company too which had to suffer from a long term loss. Only the supporting documents ensure the transparency of that financial report.