Page 6 - Fake Ruby Teaching guide
P. 6
Cooking the books
Financial statement fraud, involves the intentional misstatement or
omission of material information from the organization’s financial
reports; essentially by overstating assets or revenue or understating
liabilities and expenses.
This was the situation that Wrekin Construction found itself in with
the introduction of the Gem of Tanzania into its accounts.
Perhaps a simple question could help solve the problem of fraud at
Wrekin Construction and that is:
“when faced with RBS withholding overdraft funds why
did Unwin and Ibbotson not simply sell the Gem of
Tanzania?”
Financial statement fraud differs from other types of fraud in that
the individuals who commit the fraud generally are not the direct
beneficiaries. Members of management may benefit directly from
the fraud by keeping their jobs, selling stock, receiving performance
bonuses, or using the false report to conceal another fraud.
