Cooking the books. Creative accounting. Embezzlement. These are phrases commonly used to describe accounting fraud. But what exactly does that phrase mean?  

Accounting fraud is the deliberate misrepresentation of financial statements to conceal corporate transactions or fabricate a misleading picture of financial stability. A study shared by Thomson Reuters showed that each year, about 41% of companies commit accounting violations, while about 10% of major public companies commit the more serious offense of securities fraud. That amounts to a lot of lost money—more than $1 million for one quarter of companies in 2023 alone. 

What’s Being Done About Accounting Fraud? 

Accountants have many tools and tactics at their disposal for detecting and preventing fraud, though like company executives, employees, customers, competitors, and hackers, accountants themselves can also be fraudsters. Here are some of the practices that prudent, ethical companies and individuals are implementing to thwart accounting fraud: 

Analyzing Data 

Accounting systems are analyzing large volumes of data more efficiently than ever before. Data analytics tools can detect patterns and anomalies that might indicate fraudulent activities, such as duplicate payments, unusual vendor relationships, or suspicious transactions. 

Assessing Fraud Risk 

Accountants are conducting fraud risk assessments to identify areas of vulnerability within an organization, enabling them to establish preventive measures to mitigate the likelihood of fraud occurring. 

Auditing 

Ongoing internal and external audits are fundamental in fraud detection. Auditors are examining financial records, transactions, and internal controls to identify any irregularities or signs of fraudulent behavior.  

Documenting and Keeping Records 

Accounting systems are ensuring that all transactions are recorded accurately and transparently, making it easier to identify discrepancies or unauthorized activities that could suggest fraud. 

Monitoring Transactions 

Transactions are being scrutinized regularly throughout accounting processes to pinpoint discrepancies, anomalies, or irregular patterns that may indicate potentially fraudulent activities. 

Supporting Whistleblowers 

Accounting departments are implementing whistleblower programs that empower employees to report suspected fraudulent activities confidentially.  

Using Controls 

Accounting systems are incorporating internal controls that prevent and detect fraudulent activities through segregation of duties and authorization procedures that ensure no individual has full control over financial transactions. 

Training and Educating 

Accounting professionals are being regularly trained in the latest fraud detection techniques and can educate their fellow employees about the signs of fraud. 

Credentials That Add Up to Tremendous Career Potential 

No matter what aspects of accounting interest you, The University of Texas Permian Basin offers an online, AACSB-accredited accounting degree to match. Our programs equip you with the expertise needed for a variety of related career opportunities. Choose a program based on your education level and professional ambitions: 

Online Bachelor of Business Administration in Accounting 

A bachelor’s degree is typically a prerequisite for entering the field of accounting professionally. UTPB’s BBA in accounting—available online exclusively at this UT System institution—aims to provide you with the necessary skills and knowledge to pursue accounting and related positions in governmental, public, private, and non-profit organizations.  

Suggested course for more information on accounting fraud: ACCT 4320 – Forensic Accounting/Fraud Examination 

See where graduates of this UTPB program are working. 

Online Master of Business Administration With Accounting Track 

Broaden your business understanding while enhancing your proficiency in both traditional and contemporary accounting concepts, strategic analysis, and decision-making skills through our online MBA program with accounting track. Benefits of our 33- to 42-credit program include: 

  • An optional CPA track for those wishing to pursue CPA certification. 
  • A non-CPA track for those who desire broader accounting studies. 
  • A completion time of as little as four semesters. 

Suggested course for more information on accounting fraud: ACCT 6320 – Fraud Examination and Forensic Accounting 

See where graduates of this UTPB program are working. 

Online Master of Professional Accountancy 

Refine your expertise in historical and contemporary accounting methodologies and enhance your decision-making and strategic thinking abilities with an eye toward becoming a CPA in our online Master of Professional Accountancy program. This 36-credit online program: 

Suggested course for more information on accounting fraud: ACCT 6320 – Fraud Examination and Forensic Accounting 

See where graduates of this UTPB program are working. 

Ready to get started? Apply now! 

Sources: 
https://www.investopedia.com/ask/answers/032715/what-accounting-fraud.asp