Fraudulent Financial Reporting – a Continuous Challenge for Financial Auditors

Author:Univ. Prof. Victoria STANCIU, Ph. D.

JEL:M42

DOI:

Keywords:fraud, fraudulent financial reporting, fraud methods

Abstract:
Studies on accounting field have showed the seriousness of fraud problem and the nature of fraud. Researches within fraud area have emphasized the „fraud models” and suggested how to detect and investigate frauds. Strong corporate governance and a solid corporate culture are important pillars for fraud prevention. In crisis time, there is also a potential higher risk of fraudulent financial reporting. Is it possible to be again the witnesses of new scandals on fraudulent financial reporting as a result of the crisis pressure over companies’ management? Hard to say!\r\nThe objective of this paper is to examine some of the fraud vectors and the most appropriate prevention actions. The author focuses on the aspects that could represent red flags on possible fraudulent financial statements and on the link between strong corporate governance, the important role of the internal audit function and of external auditors in the identification of the misstatements resulting from fraudulent financial reporting.\r\n\r\n\r\n\r\n

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