Question

Write a short note on False Accounting Fraud.

Answer 1

False accounting fraud occurs when a company's assets are overstated, or its liabilities are understated to make it appear financially stronger than in reality. An organisation or its employee may alter, destroy or deface any account. Due to false accounting, the financial statements of the firm do not reflect a true and fair picture of its financial health.

Falsifying records, altering figures and keeping two sets of financial accounts are all examples of false accounting. Some more examples of false accounting are as follows:

1. An employee inflating claims for expenses.
2. An employee falsifies accounts to steal money.
3. An employee uses false accounting to hide loss caused by a trading or fraudulent activity.