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3. The fraud at Enron is one of many major financial statement frauds that have occurred in recent years (Qwest, Global Crossing, WorldCom, etc.). What are some factors that could explain why the falsifying of financial statements is occurring so frequently

Sagot :

Business owners may manipulate the accounts or falsify of financial statement to make the company look healthier to investors or lenders. They can do this by either inflating income and asset values, or underplaying the company's debts and liabilities.

False financial statement

  • The lack of standardized accounting standards. Along with the structure of management incentives, there are other factors in play that appear to contribute to an environment where fraud is almost commonplace of financial statement .
  • Conflicts of interest relationship between companies and accounting firms and result in false financial statement .

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