A misleading situation arises when financial information is presented that does not represent the true state of affairs of an organization. For example, a business could present misleading financial results by shrinking the size of its bad debt reserves or by not recognizing obsolete inventory in a timely manner. A key responsibility of the accountant is to avoid presenting misleading financial information by preparing complete financial statements that include adequate disclosures pertaining to all relevant events impacting the reporting organization.

Related Courses

Fraud Schemes