Financial statement fraud is the act of deliberately misrepresenting, misrepresenting or omitting financial statement data for the purpose of establishing a false impression of the financial strength of 'an organization. The categories that financial statement fraud falls into are improper revenue recognition, liability manipulation, expense manipulation, inappropriate financial statement disclosures, and overstatement of assets. It could be argued that many people would be involved in causing financial statement fraud. including parts of the team preparing the financial statement, assuming an organization exercises due diligence in segregating tasks. The ultimate responsibility for financial statement fraud lies with senior management personnel. In most cases of financial statement fraud, management is aware of it. This can include anyone from an accounting manager to a CEO. Mid- and lower-level employees may also falsify accounts to hide poor performance in their field or to improve performance pay incentives. Organized criminals may falsify financial statements to obtain loans. Reasons for financial statement fraud include hiding a company's true performance, revenue reasons, or to make it appear as if a business plan is working. Other reasons may include meeting lending criteria to improve borrowing power or, as previously mentioned, performance-based salary incentives. Additionally, companies may hide the true financial situation either to improve stock prices or to attract buyers. The types of schemes involved in financial statement fraud, according to the manual, are: fictitious income, improper valuations of assets, concealed liabilities and expenses, mismatch in timing...... middle of paper .... .committing financial statement fraud includes: • Maintaining accurate records. • Carefully monitor transactions and interpersonal relationships with suppliers, buyers, sales representatives and anyone else involved in transactions. • Establish a physical security system to secure company assets. • Maintain accurate personnel records. • Establish uniform accounting procedures without exception clauses. Five tactics can be used to reduce rationalizations for financial statement fraud: • Have policies in place that clearly define prohibited behavior. • Have confidential advice and reporting systems to communicate inappropriate behavior. • Ensure that that management be held to the same standards as other employees.• Clearly communicate the consequences of violating regulations and the sanctions imposed on them. who commits offenses.