discuss the role that accounting played in fraud and how the act may have affect

Question

discuss the role that accounting played in fraud and how the act may have affected the economy.’use the fraud triangle to state what you believe was the motive opportunity and possible rationalization ease/2017-196 FOR IMMEDIATE RELEASE 2017-196 Washington D.C, Oct. 17, 2017- The Securities and Exchange Commission today charged mining company Rio Tinto and two former top executives with fraud for inflating the value of coal assets acquired for $3.7 billion and sold a few years later for $50 million The SEC's complaint, which was filed in federal court in Manhattan, alleges that Rio Tinto, its former CEO Thomas Albanese, and its former CFO Guy Elliott failed to follow accounting standards and company policies to accurately value and record its assets. Instead, as the project began to suffer one setback after another resulting in the rapid decline of the value of the coal assets, they sought to hide or delay disclosure of the nature and extent of the adverse developments from Rio Tinto's Board of Directors, Audit Committee, independent auditors, and investors @v As alleged in our complaint, Rio Tinto's top executives allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure, said Stephanie Avakian, Co-Director of the SEC's Enforcement Division. Rio Tinto and its top executives allegedly failed to come clean about an unsuccessful deal that was made under their watch. They tried to save their own careers at the expense of investors by hiding the truth, said Steven Peikin, Co-Director of the SEC's Enforcement Division. Based on the complaint's allegations, Rio Tinto pic, Rio Tinto Limited, Albanese, and Elliot are charged with violating the antifraud, reporting, books and records and internal controls provisions of the federal securities laws. The SEC seeks permanent injunctions, return of allegedly ill-gotten gains plus interest, and civil penalties from all the defendants, and seeks to bar Albanese and Elliott om serving as public company officers or directors According to the SEC's complaint in 2011, Rio Tinto acquired coal assets in Mozambique shortly after disclosing huge losses associated with its previous large-scale acquisition of Alcan. Both acquisitions took place under Albanese's leadership The second acquisition was also unsuccessful as it was based on the incorrect assumption that Rio Tinto could inexpensively mine transport, and sell large quantities of high-quality coal chiefly using barpes for shipping. The SEC'S complaint alleges that the project suffered setbacks almost immediately as Rio. Tinto Aibanese and Elliott learned that there was less coaf and of lower quality than expected, and that Mozambique had rejected its barge application. The complaint alleges that the drop in quantity and

Explanation / Answer

Accounting fraud is intentional manipulation of financial statements to create a apperance of a company's financial health. It involves an employee, account or the organization itself and is misleading to investors and shareholders. A company can falsify its financial statements by overstating its revenue or assets, not recording expenses and under-recording liabilities.If the company overstates its current assets and understates its current liabilities, this will falsify the liquidity of the company or not recording expense.

In a given example following frauds are

a) the company fail to follow accouning standard and polocy to accurately value and record its asset .

b) They hiding facts from board, auditor and other members.

c)misleading financial statement.

So the company should state the true and fair view to the public instead of hiding facts .

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