Plugging holes or hiding theft? Fraudulent financial reporting

Financial misstatement but no obvious pay-off: Shane MacDonald , a forensic accountant at The Risk Advisory Group, decodes the entries and identifies the control weaknesses that made it possible.

Shane MacDonald may be contacted on tel: +44 (0)20 7578 0000; email: shane.macdonald@riskadvisory.net

In a recent case involving fraudulent financial reporting, the immediate question that we asked ourselves was “The accounts are misstated but who has benefited from this fraud and how?” That is, there was no evidence of misappropriation of cash or other assets. The financial controller had left the company abruptly, apparently overwhelmed by the demands of his role, leaving behind a quagmire of accounting misstatements.