In Tennessee and throughout the United States, a concerning corporate issue may be on the rise. Data shows that many corporations have misreported financial statements. Even worse, the cause of misreporting extends beyond mere clerical errors to corporate fraud and accounting malpractice.
If you are part of the corporate world, you no doubt understand that many businesses are under pressure to achieve certain quotas or goals. It is important to know how to spot accounting fraud. It is equally important to know where to seek support when evidence suggests financial malpractice in a large corporation.
Accounting malpractice seeks to create better numbers than those that exist
Accounting malpractice occurs when an individual or group of people manipulate financial data to give an appearance of solvency or a status that is better than the actual condition of the company. Most accounting fraud has to do with revenue, expenditures and assets. The goal of deceptive accounting is to make a company’s finances look healthy when they’re not.
Corporate accounting fraud occurs in various ways
The following list provides an overview of some of the most common ways deceptive accounting occurs in business:
- Inflating revenue is a common tactic used to commit accounting fraud.
- Understating expenditures is another way to manipulate financial data.
- Fake invoices, tax misrepresentation, manipulating payroll, overstating assets and filing false insurance claims are additional means of accounting deception.
Red flags occur for accounting malpractice when suspicious financial behavior occurs, such as a sudden revenue increase at the end of the year. Other problem issues include a relationship between an employee and a vendor or customer that seems overly close, as well as a company that is continuing to thrive even when similar companies in the same industry are struggling.
Experienced guidance and support are keys to a positive outcome
If an accountant breaches a duty of care by committing accounting malpractice, it is permissible to seek justice by filing a personal injury claim. The economic damage suffered due to financial misrepresentation may be enough to take an entire corporation under.
In many cases, you can resolve accounting malpractice issues through alternative dispute resolution like mediation, rather than entering litigation. It is helpful to connect with someone who is well-versed in accounting malpractice laws and can read financial statements and auditing documents.