There is a growing concern that accounting practices are bordering on rubber-stamping what could be classified as fraudulent activities. “Fraud” is widely defined as: “a person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.” AND “wrongful … deception intended to result in financial or personal gain…”[which also covers criminal deception – where intent to deceive can be proved].
That is wide.
So if financial statements can be proven to be fraudulent, that opens the door to tax fraud and jail sentences, as tax returns are based on financial statements. If you as officers of the taxpayers are “blind” to the “potentially fraudulent rubber-stamping by auditors” that could place you in a very precarious position, criminally. No officer of a company wants to face that. Blame it on your auditors, but if you are complacent you could be a co-conspirator – also GUILTY. So it is no longer a defence that you hide behind your auditors.
Please read the attached articles
