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Accounting fraud

24 October 2021

how does government detect accounting fraud like manipulation of financial statements , not recording sales in book of account ??

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5 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 24 October 2021

I never did that, there is are two measures called as Z-score which predicts bankruptcy and M-score which interprets fraud

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CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 25 October 2021

That should be detected by Government as per Recommendation given by CA&G appointed by Government

santwana gautam (40 Points)
Replied 25 October 2021

Govt Portal has tools like red flagging on various parameters, enforcement wing,dept also from time to time take criteria like e-way bills of new registered dealer,non filers, circular trading, related parties transactions to keep check

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 26 October 2021

That is possibly true. I bet the red flags could be wrong as per my knowledge cause audit threshold gives margin for 3% error. Consider an accountant cheating 3 lakhs from 5 crores revenue, how will the red flag. I am assumptions only and not sure if threshold limits are applicable in India.