Page 746 - The Case Lab Book

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.