FINANCIAL REPORTS – ILLEGALITIES AND FAULTS

Abstract

Financial reporting, in addition to a number of other relevant factors must be in its primary focus on the goals that takes into account the provision of the highest level of general social welfare, as well as the strategic goal of every society. The quality of financial reporting in a country is directly proportional to and corresponded with general economic well-being of the country, because the financial statements contain useful information on which to make optimal economic decisions of numerous business entities (users of financial statements) and performs efficient allocation of economic resources through the market of capital. The interest of the community to continuously improve the quality of financial reporting since, thus, creates preconditions for increasing the efficiency of the economy, the efficient functioning of markets of capital and improving economic performance in general. There are numerous ways to classify techniques for forging financial statements. Five basic types or counterfeiting techniques are presentation of fictitious revenue, counterfeit evaluation (assessment) funds; improper demarcation of transactions; concealment (understatement) liabilities and income, and inadequate disclosure. In order to effectively carry out its important social role-the role of guardian of the public interest, the auditing profession in the twenty-first century must constantly improve the review process, consistent with applicable auditing standards and reporting, regain the confidence of the market of capital and the users of the financial statements in the quality of their work.