Accounting fraud in Miami typically refers to fraud that is committed by a company, whose intent is to artificially inflate the value of the company's profits and/or assets by creating false information about the company's sales and income. In almost all cases, the company is actually showing a loss. It's also known as "cooking the books." The motivation is often to make sure that the company's earnings meet the expectation of both shareholders and the Security and Exchange Commission (SEC).
The most common ways that people commit Accounting Fraud includes Barter transactions, incomplete transactions, revenue recognition, round-tripping, channel stuffing, false statements to regulators, keeping books open, and money laundering.
Many arrested for this offense have no knowledge of any criminal activity. Often, they are faced with the difficult, if not impossible task, of having to prove to law enforcement officers that they didn't knowingly commit any wrongdoing. Worse, they may also eventually have to persuade a jury, often with extensive prison sentences hanging over their heads. While knowledge of the wrongdoing is an essential prerequisite before conviction, prosecutors will often proceed under the theory that the accused knew, or should have known that a crime/crimes were being committed.
Inside the company's accounts, false information can be exploited in several respects. Another common term used to refer to accounting fraud is "financial reporting fraud". Often, the main aim is to build opportunities for the company to increase its income. A couple of examples of how this is done include the following, in addition to those mentioned above.
- Overinflating profits and sales
- Exaggerating the value of corporate assets
- Hiding or disguising money to avoid paying tax
- Falsely report company business activity details
Sales reports constitute an especially popular type of accounting fraud. The crime is often committed by announcing completed deals while the transactions are in fact either ongoing or the transaction is not yet complete. This is done to raise the revenue figures for a specific article, such as a quarterly or annual statement.
Other examples of accounting fraud include failing to disclose gifts or bonuses to employees and intentionally failing to document holiday time and other benefits.
The Generally Accepted Accounting Principles (GAAP) outlines the various guidelines accountants are legally required to follow. Failure to act in compliance with GAAP can result in fines for the accountant as well as civil litigation liability. Generally, it needs to be proved that a GAAP guideline violation was committed by the accountant before a case involving accounting malpractice can be brought on. When they falsify documents about securities such as corporate bonds and stocks, a business accountant may also be held responsible. Violations of securities are generally illegal by federal law, and some are listed as felonies.
If it is determined that the accountant or the company is guilty of accounting fraud, punishments may consist of monetary fines as well as probation or time in jail. If the severity of the violations increases, the fines and prison terms are also going to get tougher. Repeated violations may also have heftier consequences.
There will always be a chance of there being accounting fraud. Nonetheless, by carefully supervising all the reporting checkpoints, the risk of fraud happening can be significantly minimized. All transactions are to be checked and reported appropriately. Accountability will improve if several people review the documents and books, rather than just a single person.
Business procedures should ensure that workers are made fully aware of the effects of accounting fraud. The policies must also include mechanisms for reporting in-company accounting fraud. Any reporting irregularities or employee unusual conduct may be indicators that accounting fraud is occurring.
The general information provided above about accounting fraud in Fort Lauderdale is meant for educational purposes only and is not a substitute for speaking directly with an attorney about the facts and circumstances of your case. Please call 954.500.0003 in Broward or 305.674.0003 in Miami to schedule a consultation with the Law Offices of Mark Eiglarsh.