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Accounting fraud typically occurs in larger corporations across the country as a result of presenting false information, misusing funds, overstating revenues, understating revenues, overstating the value of corporate assets and underreporting the existence of liabilities. The legal definition of accounting fraud is knowingly falsifying accounting records, such as sales or cost records, in order to boost net income or sales figures. Civil lawsuits can be brought upon not only the corporation involved in accounting fraud but also individuals involved in the process. Accounting fraud typically takes place when a corporation fails to report a chunk of its income to the Internal Revenue Service or overstates its income to the IRS when filing its taxes.
One method of accounting fraud involves the keeping of inaccurate books by a corporation or other business. Inaccurate books are typically the target of most Securities and Exchange Commission investigations. When a corporation keeps inaccurate books it means that they are not reporting all of the necessary information in the books that they should be reporting. For instance, if a business uses books to log daily sales they might mark down higher sale prices on some items to inflate their earnings. The company might also underreport their earnings to avoid paying high taxes when they send their income papers to the IRS.
Presenting False Information
Another form of securities fraud common across the country today includes presenting false information purposely for financial gain. A corporation will present false information to their financial advisors, employees, clients and other professionals when it comes to their accounting practices and other financial entities. The practices that fall into this category include the acceleration of accounting expected expenses, the delay of accounting expected revenue, engaging in off balance sheet transactions or reporting and estimating conservative estimates of future earnings of the company. Inaccurate books and presenting false information are two of the most common forms of accounting fraud that takes place in corporations today.
If you or a loved one has been the victim of accounting fraud, contact a securities law attorney immediately for expert legal counsel regarding your case. An attorney will perform an in depth investigation into the fraud, file a lawsuit on your behalf, and find other victims of the fraud for a class action lawsuit. An attorney will also be able to answer any questions you have about accounting fraud and the process of filing a lawsuit against the corporation.