If the term 'Financial Statement Fraud' conjures up thoughts of Enron and WorldCom and leads you to believe that the issue is only Wall Street's problem...
Think again.
Now, perhaps more than ever in history, we operate in a business environment that is ripe for financial statement fraud to occur, even on Main Street.
Why?
Main street companies need credit (or angel investors) in order to advance their product or service. Credit, that is more difficult to come by.
It would be easy to record additional revenue, book expenses in a subsequent period (or not at all), or omit key financial disclosures all for the sake of ensuring "the numbers" stay within loan covenants or attract new investors.
Having those funds would provide the one edge the company would need to buy inventory, sell the product, and earn the revenue that would repay the creditors.
And no one would ever need to know.
Tiffany Couch wrote an article about this in February. (Read it here)
In March, we were hired to conduct two investigations related to Financial Statement Fraud. One, on behalf of an angel investor; the other, on behalf of a main street company.
Coincidence? We think not.
