In this article, we examine the various kinds of accounting frauds which can be perpetrated, if the management is not alert to collusion between employees or if the auditors blindly assume that the management's integrity, ethics and motives are always aboveboard. We hope that our effort to document frauds will help those in the accounting profession to build their audit checklists, so that the error of misreporting is minimized and the possibility of poor financial reporting is reduced.

The financial press reporting about accounting frauds being committed by one company or another is today a very common occurrence. With sky-high aspirations of participating in the 21^st century world economy, Indian companies have, of late, also been accused of misreporting, suppressing, presenting fraudulent information in their financial statements, leading to loss of face for the firm and loss of personal freedom to the perpetrators of such elaborate schemes of deception. In such an environment, personnel of both accounting and non-accounting departments must know how frauds are committed and how to watch out for enabling circumstances where frauds can take place. This article manifests frauds that can be committed and the mindset involved to pull these off.

Risk of fraud increases when there is pressure on the employees to show unreasonably spectacular performance. Further, if employees perceive that there is an opportunity to commit fraud and get away with it, it is inevitable that frauds will occur. Overaggressive managements will pressurize accounting to be overaggressive too. Organizational culture and trade practices also enable an environment of fraud to prevail in an entity.

Risk of financial misstatement goes up, if there are changes in the operating environment and new inadequately-trained personnel are inducted. New Information Systems lead to employees divided between the comfort of the old system and the need to adapt to newer technology. Rapid growth in business leads to scalability issue in hiring competent people to man the entire process. Changing technology, product lines and activities add to further complication in financial reporting. Geographically, remote operations create further complication in monitoring, if investment in technology is inadequate. Foreign operations need to be monitored because what is acceptable at home might be illegal abroad.

Accounting World Magazine, Unearthing Accounting Frauds, Financial Reporting, Fraudulent Information, Financial Statements, Organizational Culture, Operating Environment, Information Systems, Direct Illegal Acts, Future Value Hypothetical Accounting, Tactical Frauds, Strategic Frauds, Audit Procedures.