Nature and methods of accounting fraud

Abstract

Context – In recent years, accounting scandals repeatedly produced negative headlines. These scandals damage the confidence of investors and they rock financial markets and the entire economy. Globalisation is one of the reasons why companies become more share value oriented and ethical values are neglected. Furthermore, company structures are getting more and more complex. Some companies don´t go bankrupt after its accounting fraud scandals have been detected, they continue business. But there are companies that go bankrupt after their accounting fraud has been detected. The research focuses on these companies and tackles the following research question: Is the profile of accounting frauds, whose detection leads to the bankruptcy of the company, the same for each case? Are there similarities or/and discrepancies? Methodology – To address this question, this thesis analyses certain selected international fraud cases according to five specific criteria. The 14 international accounting fraud cases are selected according to the criterium of bankruptcy of the company after the detection of its fraud. Results – The analysis came to the result that the profile of accounting frauds, whose detection ends up with the bankruptcy of the company, is more or less the same. There are the following similarities: the fraud is conducted by management, the company had a bad financial position before the fraud, the intent is to receive money from investors, the company is listed and finally, the fraud is conducted during a time span of one to two years. Value – The findings of this thesis may turn out to be interesting for all individuals who are interested to learn more about the topic of accounting fraud linked to the fact of bankruptcy of the company after the detection.