Fraudulent Financial Reporting Basics

Question 1

Incentive/Pressure

Answer 1

Usually happens when Management is

• Under Pressure
• From outside or inside sources
• Expected to achieve a goal/target (even if unrealistic)

Question 2

Opportunity

Answer 2

Situation that allows a misrepresentation to happen.

• Deficiencies in internal control

Question 3

Attitude/Rationalization

Answer 3

Mindset that justifies an bad act. (entitlement)

Question 4

Misappropriation of assets

Answer 4

Involves theft of assets

Question 5

Fraudulent Financial Reporting

Answer 5

involves Intentional misstatements

• Omissions
• Deceptive financial disclosures