Implications of fraud for the organisation:
+ Removal of funds or assets from a business
- Immediate financial implications: profits are lower than they should be.
- Long term effects on company performance: making more difficult for the company to operate effectively.
+ Intentional misrepresentation of the financial position of the business
- Overstated:
A company may distribute too much of its profits to shareholders
Retained profits will be lower than believed
Incorrect decisions will be made
Investors making decisions based on inaccurate information will find actual returns deviating from expectations
Suppliers will extend credit without knowing the real financial position of the company
- Understated:
Returns to investors may be reduced unnecessarily
The share price might fall and market strength may be eroded
Access to loan finance may be restricted
The negative publicity can damage the business by affecting the public's perceptions
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