Accounting Fraud Law and Legal Definition

Accounting fraud refers to fraud that is committed by a company by maintaining false information about the sales and income in the company books, with an intention to inflate the worth of a company's assets or profits, when a company is actually operating at a loss. These fraudulent records are then used to seek investment in the company's bond or security issues. Showing these false entries, the company will also attempt to submit fraudulent loan applications as a final attempt to obtain more money to save the company from an inevitable collapse. Through accounting fraud, a company actually hides the serious financial problems of the company.