Question

Select one type of fraud that a CPA may commit. Also examine the current penalties for such offenses. Discuss whether you believe the punishments are appropriate.

Answer 1

Select one type of fraud that a CPA may commit

In general Misstatement arising from fraudulent financial Reporting are intentional misstatements of amounts in financial Statement designed to deceive financial statement users where the effect/ impact the financial statement not to be presented all material aspects in connection with GAAP . Fraud may be include following aspects :

1) Manupulation , alternation of accounting records and supporting documents from which financial statement prepared

2) Misrepresentation or intentional omission from the financial statement

3) Intentional misapplication of accounting principles relating to account classification

4) Misstatement arises from misappropriation of assets .This involve theft of entity asset

5) In general three condition are present when fraud occur – Under pressure and commit fraud , ability to override control and create an opportunity to do fraud . last one some professional posses an attitude ,character that allow them to knowingly and intentionally commit fraud

Charged with Accounting Fraud – Will end up with serious consequences

As we are aware that Accounting fraud mainly refers to manipulate books of accounts ( in case of exces revenue recognised , overstated profit , less provision , showing company loss to avoid tax , creating false accounting statement, making false , misleading statement to regulator ) . In this scenario , The Sarbanes Oxley act also established strict standards for public company boards , public accounting firm and the management of public companies . Senior executive must take individual personal responsibility to ensure whether financial statement are accurate under SOX act . A failure to follow all rules and regulation for keeping accurate records and ensure correct financial disclosure and reporting all Income to the Internal revenue service are all relates to “: criminal fraud of accounting “