Question

Question 1 1. Please give two examples of for the fraudulent financial reporting. Clearly explain why such frauds are conducted. 2. Please give two examples of for the misappropriation of assets. Clearly explain why such frauds are conducted.

Answer 1

SOLUTION-

1. Fraudulent financial reporting   

The term fraudulent financial reporting describes the situations where knowingly or intentionally misrepresentation, omissions in financial statements done by the management to improve or change the company's results.

Example of the fraudulent in financial statements-

1 Change in the operating expenses of the company to increase the net income of the company.

2. Transferring the amount of expenses to next year to show increased net income this year

These fraudulent in financial reporting are done to improve the result of company as the accountant is is immense pressure to increase the overall profit or income of the company.

These frauds also happen to meet expectations of shareholders so they can be a part of company.

2. ​​​​Misappropriation of assets-

It involves the theft of assets like inventory or cash which is done by the third party. This can also be done by the employees through several fraudulent activities.

Example of misappropriation of assets.

1.Causing the company to pay for the goods and services they haven't used

2. Theft of the cash which is not recorded in the books yet.

Misappropriation of assets are done because of the benifit of the person who is doing that. It is also done for using organization funds for one's benifits . Employees also shows fake overtime working hours to receive more salary from firm.