Description: One of the biggest news items this past week had to be the indictment of former US president Donald Trump in a New York City courtroom. Though there was lots of debate about the event, from an accounting perspective, the interesting notion is that the charges revolve around the falsification of business records. One key element of this type of crime is that it’s not just the act of making the wrong entry onto a document: in addition, the crime requires some intent to deceive in search of a benefit. Examples include companies falsifying financial reports to fool creditors or understating income on tax forms to reduce the amount of tax paid.
Date: April 7, 2023
1) Did you and your classmates follow the news around this first indictment of a former US president?
2) Have you ever been the victim of false statements on a business document or some other important document?
3) On page 10-7 of Wiley’s Understanding Financial Accounting you will find an inset box dealing with ethics related to debt covenants. What might be some types of false statements users of financial statements need to be wary of when the company faces a debt covenant?