As we know that financial statement fraud is “the deliberate misrepresentation of the financial condition of an enterprise accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statements in order to deceive financial statement users.”  The temptations to commit this fraud may come from “situational pressure”, “perceived opportunity” and “rationalization”.  One of the most famous fraudulent financial statements is Enron scandal.  Enron was a Houston-based energy and service corporation. In 2000, the executives Kenneth Lay, Andrew Fastow and Jeffrey Skilling made this deadly choice that hides huge debts and reports big potential profits.  This choice shortly boosted the company’s stock price before catching people’s suspicion.  In the end, the company went bankrupt. Stockholders lost about $74 billion and 90,000 employees lost their jobs.  The executives were found guilty and sentenced into prison.  What I can tell is that honesty and business ethics are very important for accountant and company executive.  It is considered irresponsible and inappropriate to pursue self-interest by sacrificing social interest.  Both awareness and management need to be promoted to reduce the chance of fraud happening.

Resources:

https://www.google.ca/search?hl=zh-CN&site=imghp&tbm=isch&source=hp&biw=1366&bih=577&q=enron&oq=enron&gs_l=img.3..0l2j0i24l8.1547.2920.0.4443.5.5.0.0.0.0.94.305.5.5.0….0…1ac.1.27.img..0.5.304.REF4tS_WADk#facrc=_&imgdii=_&imgrc=lrLmJ5NZa-WJKM%3A%3Bxle2AhJm0LiziM%3Bhttp%253A%252F%252Fwww.corpwatch.org%252Fimg%252Foriginal%252Ff-enroncartoon.jpg%3Bhttp%253A%252F%252Fwww.corpwatch.org%252Farticle.php%253Fid%253D7828%3B300%3B300

http://www.accounting-degree.org/scandals/

http://www.mademan.com/mm/enron-scandal-summary.html