Business Information

Fraudulent financial reporting is an intentional or reckless behavior, whether by action or elimination, which produces financial statements that are misleading (biased). Fraudulent financial reporting that occurred in a company requiring a special attention from the management and independent auditors.

The cause of fraudulent financial reporting is generally consisting of 3 (three) things: First, manipulation, falsification, alteration of the accounting records and supporting documents on the financial statements that are presented. Second, misrepresentation or significant misinformation on the financial statements. Third, misapplication of the accounting principles that relating to the amount, classification, presentation and disclosure.

Fraudulent financial reporting can also be caused by the existence of collusion between the management and the independent auditors. An effort to prevent that collusion, then there should be a rotation of the independent auditors for conducting audits of a company. Considering that the fraud is a serious problem, then the company’s management must take comprehensive measures to protect its information systems.

In the middle of the situation where the definition of the industry has become less clear and rapid development of information which is followed by globalization that is caused competition towards the one thing that is called “chaos“, requires the companies to always be anticipated in the financial decisions in order to continue to exist in the market which has entered in phase of turbulence.

In monitoring the effectiveness of alternative choices of business strategy, it is necessary to have a management tool that is able to monitor its productivity. If you are part of the company which is involved in the evaluation of the company’s policies then this training is appropriate to refresh and updating your knowledge and understanding.

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The most effective method to obtain an adequate security system is placed on the integrity of the employees of the company. A company can take steps to improve the integrity of the employees and reduce the possibility of fraud by paying attention to, first, Hiring and firing practices. For hiring and firing the employees must be done carefully and selectively.

Second, Managing disgruntled employees. There are many employees who are doing the fraud in order to seek revenge or justice of the mistakes that have been imposed to them. Third, Employees training. Fraud will less occur in an environment where employees believe that security is the altogether responsibility for both employees and management. One way to prevent fraud is to design a system that is equipped with sufficient internal controls so that the fraud is difficult to be done by the outsiders or people inside the company.

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In this globalization era, the demands on the paradigm of good governance in all economic activities can not be avoided anymore. If the condition of good governance can be achieved then it is expected that the realization of a clean government and the formation of civil society as well as good corporate governance are not a dream anymore. Therefore, the demand for maintaining the good corporate governance (GCG) is a necessity which can not be negotiable.

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To obtain a clear picture about company’s financial developments, it needs to conduct an analysis or interpretation on the financial data of the relevant companies, where its financial data was reflected on the financial statements. The measure that is often used in financial analysis is ratio. Financial report is made so it can be use as an important utility for analyzing the company’s economic health.

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