1.1 Introduction
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Describe the role financial statements play in U.S. business.
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Describe the nature of financial statement fraud.
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Discuss financial statement fraud statistics.
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Through an example, explain how financial statement frauds occur and are concealed.
In this topic, you will be given the foundations for understanding financial statement fraud. As you study, you will be introduced to some of the major frauds that have shaped the environment for corporate reporting and auditing, including the famous Enron and WorldCom frauds among others. You will also learn how financial statements are used in today’s world and explain who the major organizations (government and private) are that are trying to ensure that financial statement fraud is prevented and detected. Last, you will also be introduced to some motivations that cause executives to engage in financial statement fraud.