Errors in applying Accounting Standards that misstate financial reports
Investors need to be able to rely upon the information provided to them by Directors of the entities in which they invest. Unfortunately, misstatements of financial reports occur due to either fraud or error. In this publication, we consider the accounting errors that we encounter when providing expert evidence on disputed accounting treatments and misstatements in financial reports and the relevant accounting standards that have not been correctly applied.
The key areas of misstatement that we consider relate to:
- Inappropriate assessment of the entity’s ability to continue as a going concern
- Overstatement of revenue and income
- Understatement of costs and expenses
- Impairment of assets
- Overvaluation of assets
- Incorrectly capitalising expenses as assets
- Understatement of liabilities
- Failure to recognise liabilities and obligations
- Incorrect measurement of fair value and recoverable amount
- Incorrect consolidation and assessment of control of an entity
- Incorrect equity accounting and assessment of significant influence of an entity
- Failure to make the appropriate classification of presentation
- Failure to disclose information that is material to the understanding of the financial report
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