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Penalties and potential defenses for accounting fraud

On Behalf of | May 30, 2023 | Fraud |

If a person is accused of accounting fraud, they may need information about potential penalties and defenses. Accounting fraud refers to a person who has intentionally manipulated financial statements, records or books to deceive others.

It may involve defrauding investors, regulators or lenders either to hide financial problems or for personal gain.

Examples and penalties

There are several examples of how accounting fraud can occur. It may include overstating revenue, understating expenses, creating false assets, concealing liabilities or misrepresenting financial statements.

Overstating revenue may involve recording sales that did not occur to increase revenue numbers. If the person deliberately underestimated expenses, like salaries or costs of products to inflate profits, that is also fraud.

It is fraudulent to create false entries for assets that do not exist or hide debt to make it appear that the financial position is stronger than it is. An accountant also cannot change an organization’s financial statements to mislead investors.

In Texas, a person may face fines, penalties or requirements to pay restitution if they are found guilty. These can vary depending on the amount of money involved in the fraud.

Potential defenses

A person who is accused of accounting fraud may have potential defenses available. If they can demonstrate that the financial misstatements were not intentional or that the accounting methods were within generally accepted accounting principles, those may be defenses.

There are resources available to defend an accused person against a charge of accounting fraud.


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