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Pressure from superiors and investors or from media to make a firm's numbers "look good" in order to drive its stock upward can contribute to employees making poor choices. When a firm inflates sales or earnings or deflates expenses in its financial reporting, this organization is engaging in

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When a firm inflates sales or earnings or deflates expenses in its financial reporting, such organization is engaging in Audit Fraud

This type of financial manipulation is very common among firms nowadays.  

Further Explanation

However, there are two ways that firms manipulate financial reports or financial statements.

  • The first approach used by most firms to commit fraud is altering the company’s earnings on the income statement. Firms involved in this fraud by inflating the company’s revenue and gains artificially or by deflating the company’s current expenses.
  • The second approach used by most firms to commit fraud is minimizing the company’s current earnings on the financial statement or report by inflating the firm current expenses or deflating the firm’s revenue

Financial statement fraud refers to an intentional misstatement of the financial reports or statements. In other words, it is a calculated alteration of a firm financial statement. Most firms commit financial statement fraud in order to mislead the users' of such financial information and also to portray a rosy picture of the firm financial situation

Some of the ways that financial statement fraud can be accomplished include

  • Not properly stating the revenues
  • Manipulating the Expenses
  • Improper recognition of liabilities
  • Incorrect cash flow presentation

Learn more about audit fraud at:

brainly.com/question/11008356

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