Question

Explain in details how financial misconduct can cause actual financial losses

Answer 1

Financial misconduct includes the following:

1. Theft or other misappropriation of assets

2. Irregularities and misstatements in company records

3. Financial wrongdoing

4. Forgery and other alterations

5. Fraud and other unlawful acts

These misconducts adhere the basic business ethics of a business organisation and therefore are the cause of huge financial loses. Any kind of theft directly affect the financial position of a business by loss of an asset, and also degrades the goodwill of such organisation.

Window dressing means the misstatements in company records. Companies try to alter their records to increase the profitability of the business in the books. This technique is a fraud, and when caught directly affects the business. These frauds lead to demolish the trust of stakeholders and thus lead to financial instability of business organisation.