Prevent Fraudulent Activity with Financial Reporting

Investors’ confidence and reputation are valuable and priceless assets to all companies, therefore maintaining those assets require an investment in fraud detection within financial reporting.

Fraudulent Financial Reporting is a scam that is increasing every year in large numbers and percentages. The presence of fraudulent financial reporting begins with pressure or opportunity. Pressure arises from goals not being met or from the “tone at the top,” while opportunity is due to lack of internal controls and security.

According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), revenue fraud increased from 50 percent of all cases to 60 percent of all cases between the two 10-year studies (1987-2007). The U.S. Securities and Exchange Commission (SEC) names the CEO and/or CFO for some level of involvement in 89 percent of the fraud cases.

  • Fraud affects all company sizes and normally is detected through the following red flags:

  • Complex or unstable organizational structure

  • Significant cash flow changes

  • Improper revenue recognition

  • Recording fictitious revenues or assets

  • Asset overstatements and/or expenses understatement

  • False acquisitions or netting amounts of miscellaneous items

  • Disguised transactions through related parties

It is highly recommended to implement controls, policies, and procedures to prevent and/or detect fraud before it occurs, such as:

  • Implement internal controls for segregation of duties for postings and authorization

  • Implement a fraud policy and fraud hotline

  • Form an independent audit committee

  • Improve the “tone at the top” that demonstrates ethical behavior for the entire company

  • Schedule annual examinations and audits of financial statements by an outside party

Executing the recommendations are the first steps to reducing, preventing, and detecting fraud within your company’s financial statements. Consistency in controls and policies will aid in catching them before it is too late.

Featured Posts
Recent Posts
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
Socialize with Us
  • Facebook
  • Instagram
  • LinkedIn Social Icon
  • Twitter
  • Pinterest
  • Yelp Social Icon
Contact Us

Tel: 770-742-9136

Fax: 770-731-8130


Email: info@distincttax.com


Address​​​​​​: 1115 Mt. Zion Road

              Suite 14

              Morrow, Georgia 30260

Hours of Operation

During Tax Season (January - April 15) 

Monday - Friday 9:00 AM - 6:00 PM

Saturday - Appointment Only

Sunday - Closed

Post-Tax Season (April 16 - November) 

Monday - Thursday 9:00 AM - 4:00 PM

Friday - Appointment Only

Saturday and Sunday - Closed

Closed on Holidays

 

Post-Tax Season (December)

Appointment Only

Our Memberships

2020 © Distinct Tax, LLC

All Rights Reserved | Privacy Policy