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Accounting Fraud

Accounting fraud is defined as the deliberate manipulation or misrepresentation of financial records regarding sales, expenses, or revenue in an effort to make a business’s financial condition appear better than it actually is. Unfortunately, many companies are unaware that their acts constituted accounting fraud when they are charged with this offense, which can lead to jail time and expensive fines. Having the advice of an experienced attorney can make all the difference in the outcome of a case, so if you are being investigated for accounting fraud, it is important to speak with an experienced white collar crime attorney who can help you formulate a defense.

What Constitutes Accounting Fraud?

Businesses must comply with the Generally Accepted Accounting Principles (GAAP), which require companies to keep records that:

  • Reflect the reality of their financial status;
  • Reflect revenue only when it is certain; and
  • Are kept up-to-date and reported correctly on tax returns.

Failing to comply with these rules can lead to charges of accounting fraud, which encompasses a broad range of actions, including:

  • Inflating recorded sales revenue;
  • Failing to disclose risky investments;
  • Misdirecting funds to defraud customers,
  • Failing to disclose unusual accounting methods;
  • Under-recording a company’s expenses or earnings;
  • Merging short-term and long-term debts into a single amount in an effort to improve the apparent liquidity of the company;
  • Generally falsifying financial results; and
  • Hiding or concealing assets in an effort to avoid paying taxes.

Although any employee can commit accounting fraud, some of the most commonly charged individuals are:

  • Company accountants;
  • Auditors;
  • Business executives; and
  • Bookkeepers.

Someone accused of committing one of these acts can be charged under the Sarbanes-Oxley Act which prohibits fraudulent accounting practices and applies to both:

  • Intentional conduct resulting in accounting fraud, which includes reckless actions; and
  • Repeated instances of negligent conduct.

Even supervisors who were unaware of the fraudulent accounting practices of an employee can be held criminally liable for accounting fraud if a jury finds that their conduct was negligent. Whether a fraudulent accounting action was taken to increase profits by inflating company stock values or was instead used to obtain financing or avoid paying a debt, the repercussions can be serious and include fines of up to $5 million per defendant, unless the defendant is a company, in which case the amount is increased to $25 million. Those who are convicted also face up to twenty years in prison. Aside from suffering damage to their reputations, business owners can also have their licenses revoked and be prohibited from doing further business in their industry.

Contact an Experienced White Collar Crime Attorney Today

Being convicted of a white collar crime, such as accounting fraud, can have serious consequences for the accused party, including jail time and prohibitively expensive fines that can leave a company and its owner bankrupt. If you live in south Florida and have been accused of committing accounting fraud, please contact Jeffrey S. Weiner, P.A., Criminal Defense Attorneys at (305) 670-9919 to schedule a free consultation with a dedicated white collar crime attorney who can evaluate your case.

Resource:

legcounsel.house.gov/Comps/Sarbanes-oxley%20Act%20Of%202002.pdf

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