International Journal of Accounting and Taxation

The Anatomy and Synthesis of Financial Fraud
Dr. Kingsley Wokukwu

Abstract
This paper explores the synthesis and anatomy of financial fraud and factors that led to the fraudulent financial reporting. It examines the role accounting rules and standards, regulators, auditors and regulatory capture played in misleading published financial reports. This paper finds that the broad nature of accounting rules manifests the deliberate actions of some corporate executives to engage in earnings manipulation, income smoothing, improper revenue recognition or realization and earnings management to meet predetermined earnings projections. The SEC deems these practices as abusive, materials and intentional misrepresentation of financial information. This paper postulates that the actions of the corporate executives to take adverse advantage of the broad nature of accounting rules grossly violates GAAP requirement and precludes transparency in the published financial reports. This paper finds that the practices of some auditors violate The Standards for the Professional Practice of Auditing which requires auditors to alert all concerned the possibility of intentional fraudulent accounting informationand the auditors should have sufficient knowledge to recognize the indicators for potential fraud.

Full Text: PDF     DOI: 10.15640/ijat.v2n4a2