Although it usually doesn’t involve physically stealing money, financial statement fraud is commonly considered the most...

Although it usually doesn’t involve physically stealing money, financial statement fraud is commonly considered the most expensive type of fraud. Why is this true?

Expert Solution

Financial Statements are prepared and presented annually, in accordance with applicable Financial Reporting Framework. Financial Statements are intended to serve their wide range of users. Users of Financial Statements includes Prospective Investors, Employees, Government Authorities, Suppliers, Customers, Researchers, etc.

The users of Financial Statements will take various decisions based on the information contained in the financial Statements. When the information provided by financial statements is Fradulent in Nature ( Popularly known as Fradulent Financial Reporting Framework), the decisions that will be taken or already taken, will be seriously effected.

Since, it costs Users, both with in and outside the entity, spread across the globe, Financial Statement Fraud will cause serious repercussions and huge loss of Financial Resources.

Therefore, it is said that, "Although it usually doesn’t involve physically stealing money, financial statement fraud is commonly considered the most expensive type of fraud."

ekkarill92 answered 2 years ago

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