Accounting scandals come with severe penalties—you can “account” on that. Just consider Madoff ponzi scheme, the largest in history. Investors were wrongly under the impression that Bernard L. Madoff Investment Securities LLC was worth $64.8 billion, and they ultimately lost $36 billion. Madoff informed his sons about the ponzi scheme in place—and they reported it to the FBI. He’s now serving a 150-year prison sentence at Butner Federal Correctional Complex.
Accounting fraud really isn’t hard to identify. When employees steel or hide money—it’s accounting fraud. Over-recording sales revenue or under-recording expenses are both examples of accounting fraud. To avoid being the victim of fraud, be very cautious and alert. Investment opportunities that seem “too good to be true” are usually just that. Investors should also avoid considering low-risk, high return investments and becoming involved when the terms and/or legitimacy are not easily understood.
To learn more valuable tips, check out this infographic presented by AccountingSchoolGuide.com!