Legal Issues Affecting a Bookkeeping Business Chron com


If you believe you have been a victim of accounting fraud, or you work for a fraudulent company, then then you will want to contact a federal criminal defense lawyer. Accounting fraud is a serious accusation, and the strategies you employ will determine the outcome of your case and the life of the business. In 2002, a federal law known as the Sarbanes-Oxley Act was passed to prevent whistleblowers from being retaliated against for reporting accounting fraud. A whistleblower is an individual who informs the government that a company has engaged in fraudulent activity.

  • In addition to concealment or misrepresentation of finances, you can also be charged with conspiracy, racketeering, conflict of interest and embezzlement if you intentionally alter the facts of a financial transaction.
  • It involves an employee, account, or corporation itself and is misleading to investors and shareholders.
  • Depending on each case, the District Attorney may file charges as a misdemeanor or a felony.
  • He said common areas of suspected wrongdoing are repairs and improvements, and moving the expenses of one job onto another job.

No accounting fraud has taken place because the errors were not deliberate. Now suppose the CEO of a publicly-traded company knowingly makes false statements about the firm’s prospects. The Securities and Exchange Commission may well charge that CEO with fraud. However, it is not accounting fraud because no financial records were falsified. A forensic audit, or forensic examination, is intended specifically to identify any illegal activity related to a company’s financial records. The results are intended to be suitable for use in civil and criminal court cases and other legal matters.

Corporate Fraud

His methods can broadly be categorized into qualitative and quantitative methods. Forensic accountants sometimes are employed by big corporations to conduct internal audits that help in fraud prevention at the earliest. Similarly, theAssociation of International Certified Professional Accountantsconducts a program that awards “Certified in Financial Forensics” credentials to forensic accountants. CPAs can build professional experience in fraud investigation before taking the CFF certification test. Institutions offer these degrees at both the undergraduate and graduate levels.

A credit union employee also jotted down Padilla’s license plate number. In 2010, Puga was indicted on a charge of theft of property in the range of $1,500 to $20,000. She again received five years’ probation, as well as 350 hours of community service and a $1,000 fine, court records show.

Accounting Fraud

She had been scheduled to stand trial last month in El Paso on other theft charges from 2019, but the jury trial was reset for April, a court official said. Of the 57 percent that did conduct a background check, 21 percent found the job candidate had a criminal history — and made the hire anyway. Of those, only about 50 percent were referred for criminal prosecution. That’s because the perpetrators may have been fired or received some other discipline or the businesses feared bad publicity, McNeal said. A 2022 report on occupational fraud by the associationfound that 43 percent of businesses that reported being the victims of fraud had not performed a background check on the perpetrators before hiring them.

The victims of bookkeeping fraud often are investors who may sue the company and you for false reports. Investors might claim they would not have invested in a company if they had seen correct financial statements. In addition to concealment or misrepresentation of finances, you can also be charged with conspiracy, racketeering, conflict of interest and embezzlement if you intentionally alter the facts of a financial transaction.

Political economy of a plural world: Critical reflections on power, morals and civilization

In 2007, Lehman Brothers recorded net income of $4.2 billion on $19.3 billion in revenue. The AIG accounting scandal is centered on the mortgage meltdown that began in 2008 and eventually caused the Great Recession that persisted for several years. The company had placed huge bets on risky mortgages in the form of a financial instrument called collateralized debt obligations . GE’s settlement with the SEC includes a $200 million penalty for violation of securities laws related to anti-fraud, reporting, disclosure controls and accounting controls.

  • At the University of New Haven, you can earn the certifications you need even sooner than you would at most other schools.
  • Health care fraud can be committed by medical providers, patients, and others who intentionally deceive the health care system to receive unlawful benefits or payments.
  • Individuals and companies can both be criminally prosecuted for accounting fraud.
  • By 2013, the company had repaid its debt, which reportedly earned $22.7 billion in interest from the bailout, to the government.
  • Padilla allegedly took a photo of the check and used the account number and routing number to pay her bills, the attorney said.

Padilla falsely told her employers that using Melio was necessary because some of Superior Fence’s vendors were no longer accepting credit card payments, according to the complaint filed Jan. 6 in state District Court in San Antonio. She received a 20-day jail sentence, and court records indicate she served 16 days. In 2019, a complaint was filed against her for fraudulently using someone else’s ID. She also received a two-year jail sentence in 2014 for theft of property from $1,500 to $20,000, El Paso’s website shows. Court records show a charge of theft by check of less than $500 was dismissed in July 2008. She’s been indicted three times in Bexar County and charged multiple times in El Paso County, where she previously lived, under the surnames Padilla and Puga.

Bookkeeper and Other Forms of Embezzlement

This is not exhaustive – it is indicative of the nature of the problem of presenting financial reports as uncontested. Albeit accounting has an ‘aura of neutrality and objectivity’ , its calculative practices are not an instrument of neutral depiction of reality. Accounting mediates the comprehension of the external reality through the use of ‘conventions’ (Diaz-Bone & Salais, 2011, 2012) which are ‘arbitrary, political and moral in nature’ (Chiapello, 2017, p. 57). In this sense, the calculative practices of accounting can be better explained as a cognitive tool through which some aspects of reality are mentally classified, understood and represented.


This paper explores how and why Non-Governmental Organisation governance was disrupted by changes in an organisation’s internal and external environment. A detailed single case study of a large NGO operating in Sri Lanka is conducted. Data collection consists of semi-structured interviews, document analysis and participant and non-participant observation. Laughlin’s model of organisational change provides the theoretical foundation on which changes in the case NGO’s interpretive schemes, design archetypes and organisational sub-systems are discussed. The changing of interpretive schemes and organisational sub-systems, in our case, was easier than changing design archetypes. Consequently, our paper introduces ‘protective reconfiguration’ as a new change pathway to Laughlin’s model of organisational change.

Please refer to a complete list of Educational Policy and AcBookkeeping Crimesation Standards. It’s Time for Accounting to Change Its Approach” — Calls for new approaches to training auditors to emphasize the need to prioritize fraud detection and end self-regulation of corporate accounting practices. When the housing market crashed in 2008 and foreclosures multiplied, AIG’s Financial Products division incurred losses of $25 billion. The company’s questionable accounting practices exacerbated the losses. AIG’s lowered credit rating forced the company to post collateral for its bondholders, worsening its financial situation.

Can accountants embezzle money?

One of the most common types of fraud is accounting fraud, and one of the simplest tactics internal accountants use to steal money is called “double checks.”