Cooking the Books: The Auditor's Job

Just as some people cheat on their tax returns, thinking they will not be caught, some companies "cook the books" hoping auditors and regulators will not catch them either.

Like "borrowing" $20 from the till until payday, and then not being able to repay the "loan," small illegalities can snowball into major fraud.

Remember, an auditor's job is only to review systematically the company's accounting and control procedures and then sample its business transaction to see whether appropriate policies and procedures are being followed in practice. But it is quite possible for a dedicated and corrupt management to mask transactions and deceive these auditors.

Related:

• Cooking the Books: Why do managers cook the books?
• Cooking the Books: This is very different from "Creative Accounting"
• Cooking the Books: Puffing up the Income Statement
• Cooking the Books: Techniques to Puff Up the Income Statement
• Cooking the Books: Sweetening the Balance Sheet
• Cooking the Books: Techniques to Sweeten the Balance Sheet
• Cooking the Books: The Auditor's Job
• Cooking the Books: Investors, be warned.