Financial Statement Fraud Investigations Essay Example | Topics and Well Written Essays - 1000 words

fiscal Statement player Investigations - Essay ExampleThe inventories were shared amidst the various stores of the company to boost gross revenue. Various external vendors were arranged to ship merchandises of the company claiming fake discounts. slews of merchandises were sold to wholesalers and then the receipts were spread to single stores of the company. This illegal money was entered and circulated between the Antar family and was parked into unrevealed foreign bank accounts. The initial reports suggest that when macabre Eddie went public about twenty years ago, its shares were traded at $8. The companys shares have inflated 10 times during the years due to manipulation of accounts. By showing fake gross revenue, misrepresented inventories, doctoring and window dressing financial statements, the company was able to hide its adjust picture of financial position from the public. Thus, the companys stocks looked more attractive from outside than it actually was. The gross rev enue of the company never fell since the merchandises circulated between the various stores and was treated as revenues. Such fraudulent practices helped Crazy Eddie to maintain a healthy double-digit growth and consequently inflated the companys share prices. ... payable to this, the creditors got the impression that the companys demand was unmatched and hence they extended the credit period. The payments of actual sales were made in installments. Each installment of a particular sale was treated as individual sales. The sharing of inventories between some forty stores helped the company conceal true facts. The scope of Examination Financial statement frauds challenges the integrity and corporate social responsibility of companies. These frauds may be malpractices in the form of well-educated misrepresentation, alteration of financial reports, falsification, doctoring business documents and business transactions, deliberate window dressing and misapplication of accounting policies , inflating sales and inventories, bribes, fictitious revenues, over or understatements in financial statements, and so on. The financial statement fraud enquiry aims to implement integrity and CSR in all companies by encouraging transparent, reliable, and investor-friendly financial statement. Financial statement query justifies the concept of audits and establishes the confidence of society as well as all market participants. It tries to make the jacket market more efficient by providing perfect information for all participants. Financial scandals not alone ruin the repute of the company, it might also create negative sentiments in capital markets, affects the nations economic growth and prosperity. It gives the culprits one more chance to plead guilty and rectify accounting practices and malpractices. Fraud examination can help protect the companys minority shareholders from potential bankruptcy or substantial economic loses.