Question

1. What are financial statement frauds?                                                              (1 mark)
2. Give one example of a financial statement fraud that can happen in an information technology company.                                                                    
3. Provide two motivations for the financial statement fraud listed in part (b).                                                                                                                                       

Refer to Rezaee’s paper (2005) titled “Causes, consequences and deterrence of financial statement fraud” where the author discusses six main ways a financial statement fraud can be committed. Select 4 ways a financial statement fraud can be committed and provide one example for each way to illustrate the fraud

Answer 1

A) Financial statement fraud is the delibrate misrepresentation of financial condition of enterprise accoumblished through the intensional misstatement or omission of amount or disclosure in the financial statement. financial statement frauds are usually committed by those in senior level such as upper level management.

B) Auditors can use information technology to assist in an audit, while a company can use computer software in order to make records easier to collect.Auditors to be aware of any technological changes made to systems in order to keep track of any issues that could result in fraudulent financial reporting.