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Whistleblower Law Accounting Fraud

Whistleblower Law - Accounting Fraud – overstating revenue, understating or underreporting revenue, Misrepresenting assets, inadequate accounting controls,

Whistleblowers have become a symbol of courage and accountability in today’s world. In recent years the law has recognized this, providing protections for employees that choose to expose their company’s unethical actions. Accounting fraud is an area ripe with whistleblower suits, as company insiders are often in a unique position to expose it. These schemes can be very complex, and almost impossible to discover from outside of a company’s ranks. That is why it is more important than ever that employees hold their companies accountable. Altman & Altman LLP is here to help you do just that.

Accounting fraud is the illegal alteration of a company’s financial information to manipulate a company’s apparent health by falsely recording revenue, expenses, assets and liabilities on company documents. Companies may do this to attract investors or to secure bank financing. Employees of the company may also commit accounting fraud for personal gain. For example, an employee may inflate revenue if their bonus is dependent on it. Fraud is common in companies with financial difficulties, and where employees are under pressure to perform at a high level.

Different types of accounting fraud to look out for

  • Overstating revenue: a company may “cook the books” to indicate that it is taking in more profit than it actually is. This would in effect drive up the share price of the institution based on the false information.
  • Understating or underreporting expenses: a company may report less expenses than it has. This may have the advantageous effect of falsely increasing its perceived profits. Some cases of this involve postponing expenses to a later billing period to make the current billing period appear more profitable.
  • Misrepresenting assets: This may involve falsifying the value of an investment. Companies are supposed to indicate when an investments value depreciates. A failure to do this would make the finances of the company appear to be in better shape by misrepresenting its short-term liquidity.
  • Inadequate accounting controls: Best practice dictates that companies have internal controls that prevent accounting fraud by its employees. If a company does not adequately monitor its employees using controls, there is a higher risk of fraud. Some controls include: a company-wide fraud risk assessment, whistleblower hotlines, oversight of accounting documents, and expense review. Companies may also try to mitigate factors that lead to fraud by lowering incentives to manipulate data including: pressure to meet earnings, focus on short term performance, poor oversight, and overreliance on processes.

The Securities and Exchange Commission (SEC) Whistleblower Program was implemented following the 2008 financial crisis to provide incentives and protections for whistleblowers to report violations of federal securities laws, including accounting fraud. The bottom line: If you see something that doesn’t look right within your company, there may be a reward for reporting it. The SEC will reward individuals that come forward with high-quality original information which lead to over $1 million in sanctions with up to 30% of the money collected.

Whistleblowers help preserve the integrity of our country’s financial institutions and identify corrupt business models that seek to undermine them for profit. Our attorneys understand that the decision to come forward about fraud within your own workplace is a difficult one. That is why we are here to guide you through every step of the process. At the law firm of Altman & Altman, our group of skillful Whistleblower Lawyers will be by your side every step of the way to help you navigate these difficult waters.

To schedule your free consultation with an experienced whistleblower attorney at Altman & Altman LLP, call 617.492.3000 or contact us through our convenient online chat.

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