Olympus 2011 Financial Stock Chart. Digital image. Petapixel.com. N.p., n.d. Web. 16 Sept. 2014. <http://petapixel.com/assets/uploads/2011/11/olympus_mini1.jpg>.

Financial statement fraud is a scathing issue that has surrounded the financial world for several years. Having just finished my class 5 preparation and test, the idea of financial statement fraud lingered in my head. How is it that firms see any long term benefit in falsifying their records? Why have we become a human race that insists on focusing all efforts into short term benefits? Financial statement fraud harms many, if not all, of the stakeholders involved and associated with the firms’ actions, and is the epitome of the word unethical.

Olympus, one of the many firms that participated in the “deliberate misinterpretation of their financial condition“, has been sued for a sum of $273 million for committing 13 years of financial fraud. It seems as if the same actions committed by Enron, Xerox, and many other firms continue to be ignored. The CGA described three main factors which contributed to financial fraud, which includes situational pressure, a perceived opportunity, and a means of rationalization.

Companies begin to lose trust in each other, worsening the business environment. Employees begin to doubt the promises made by their superiors, creating anxiety amongst workers. Banks begin to place more strict regulations on credits, making it more difficult for honest companies to borrow. Enterprises such as Olympus need to stop thinking of the short term gains and start thinking about the long term benefits for society, because in all odds, the short term gains made by the fraud will almost fully be counteracted by the lawsuits and loss of trust inherited by the company.

Main Sources:

Langeland, Terje. “Olympus Sued for $273 Million After 13-Year Fraud.” Bloomberg.com. Bloomberg, 8 Apr. 2014. Web. 16 Sept. 2014.
Coenen, Tracy L. “The Wide-Reaching Impact of Financial Statement Fraud.” Sequence Inc Forensic Accounting. Sequence Incorporated, n.d. Web. 16 Sept. 2014.