IFRS: Who Commits Financial Fraud and Why? (The why is simple = self interest)

There are three groups of business people who commit financial statement frauds. They range from senior management (CEO and CFO); mid- and lower-level management; and organizational criminals.

CEOs and CFOs commit accounting frauds to conceal true business performance, to preserve personal status and control and to maintain personal income and wealth. Mid- and lower-level employees falsify financial statements related to their area of responsibility (subsidiary, division or other unit) to conceal poor performance and/or to earn performance-based bonuses. Organizational criminals falsify financial statements to obtain loans or to inflate a stock they plan to sell in a "pump-and-dump" scheme.


Methods of financial statement schemes range from fictitious or fabricated revenues; altering the times at which revenues are recognized; improper asset valuations and reporting; concealing liabilities and expenses; and improper financial statement disclosures.