Misleading

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.

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Fraud Schemes