FINANCIAL STATEMENT FRAUD IN AN ORGANIZATION: PROBLEMS AND SOLUTIONS
1.1. BACKGROUND OF THE STUDY
The web star dictionary defines fraud as “an intentional deception to cause a person to give up property or lawful right, which could also mean deceit,
trickery or cheating. According to statement of internal audit standard No2 of the Institute of Internal Auditors, USA, fraud is defined as an array of
irregularities or legal acts characterized by international deception.
The world of financial statements fraud needs no introduction. The practice of manipulating the financial statements of companies to bolster their position is
act new but got to a height in Enron and world.com (http://world.com) saga (Razace.2002).
According to the Association of Certified Fraud Examiners (ACFE), financial statement fraud is the deliberate misrepresentation of the financial condition of an
enterprise accomplished through the intentional omission mount in the financial statement of organization to deceive financial statements users. It caused
the accounting firm a very big embarrassment and saw the demise of the world leading accounting firm, Author Anderson (AA) (Isaac, 2008.2).
The current business environment, have pushed the top of many companies and organization with paying attention to how to make the financial statement
look better in order to attract investors or paint a good picture of their companies, using aggressive accounting (Anumaka; 2007:1)
Fraud is classified into two categories:
* Fraud involving the manipulation of the records and accounts
* Fraud usually by employees involving the the,
un-appropriation or embezzlement of companies funds in the form of cash or its other assets usually by junior stas.
Apart from the problem of scarce resource, organization run the typical risk of fraud and errors even more problems solution to fraud is not sought far. In this
project work, problems of financial statement fraud will be extensively assessed with its solution in relation to organization.