INTRODUCTION

Studies revealed that the impacts of manipulated financial information

are huge. Fraudulent financial information spoils the present economy
while leading financial information users to make wrong decision on the
economy and companies
The reliability, transparency and accurate information enable users of
this financial information in the like of creditors and investors, to make
sound and rational decisions.
The cases of WorldCom and Enron have significantly shaken the world
and have brought more concerns on fraudulent financial information; as
these financial frauds have significantly affected investors, creditors,
employees and the government.
 INTRODUCTION
Statement of Problem: Most of the investments and financial decisions
on companies are done based on the financial figures of the companies
enclosed in their financial statements. Nevertheless, some of the
companies financial information does not reflect the real financial
health of the company due to some frauds and manipulations of the
financial information.
Objectives:
Understand the notion of financial information and its importance
Determine the factors that cause fraudulent financial information in companies
Determine the impacts (damages and losses) of fraudulent financial information
 INTRODUCTION
Methodology: This work will use the deductive research
approach to identify the financial frauds and manipulations in the
financial information of Amway and other major companies that
have been smashed by fraud scandals.
Limitations
The first limitation is that the information on which the project relies is
obtained from secondary source, from the internet, journals and articles.
The second limitation is that most of the available secondary data are not
quite recent, three years older for the most recent ones.
 LITERATURE REVIEW
Tak (2013) stated that financial information is primarily an
accounting function, but not solely the accountants or
accounting department gather and prepare the information,
but additionally, all departments participate to the
production of financial data and information.
Fraudulent financial reporting refers to the violation of
accounting standards through the intentional omission of
existing figures or the inclusion of fictitious figures as
supported by Arens and Loebbecke (2014).
 LITERATURE REVIEW
Factors Causing Fraudulent Behavior:
Non independent internal audit department
Audit Fees
Opportunity
Motives

Techniques of Manipulation:
Earnings management
Income smoothing
Creative accounting practices
 METHODOLOGY
Research Design
This research will embrace the deductive research design through the
description and analysis of facts.

Data Collection Method

The main data used in content analysis are mainly written materials such as
textbooks, journals, articles and newspapers; content analysis also use other
forms of communication instruments such as videos, audios and speeches.

Data Source
This project will not use the primary data. Consequently, it will rely on the
secondary data, which are obtained through books, journals, articles, newspapers
and the companys website for the case of Amway.
 PRESENTATION OF FINDINGS
Amway Scandal of 1983
Convicted of import fraud in Canada in 1983
The company was using shell companies to inflate its sales figures to reduce the
amount of customs liability it owed
The company had under invoiced 115 million USD worth of goods to 49 million
USD. Through this they were able to save millions of dollars on custom duties

Toshiba Accounting Scandal 2015

The company for the past several years had been misreporting figures
The main blame fell on the top management which were forcing middle
management to massage numbers as well as understate costs and delay
recording
Total accounting fraud was believed to be 1.2 billion USD
 PRESENTATION OF FINDINGS
Valeant Pharma Scandal 2015
The company used the phenomenon of adjusted earnings to make its
report seem better
It was using a subsidiary to book fake sales
Valeant booked $69 million in fictitious drug sales through another, related
pharmacy called R&O
in the first nine months of this year, Valeant said its adjusted earnings
climbed to $2.7 billion, up 35% from just under $2 billion a year ago. That
makes it look like the company is having a great year.
By standard accounting measures, though, it's not. Valeant's
actual bottom line has dropped 81% this year to a mere $70 million.
 DISCUSSION
The first lesson learnt was that as we saw from the Toshiba case,
the entrance of independent directors was a good way of digging
into the culture and finding the flaws.
The second lesson was that no matter how much benefit they can
derive from it, public companies will always be under scrutiny,
which implies that they can hide for a few years but eventually
they will get caught.
Lastly, there is more to accounting scandals than just accounting.
Management vision and culture are important determinants of
such accounting scandals to begin with.
 CONCLUSION
The main implications of this project to the community is the focus
on developing a better understanding of how accounting
standards can be manipulated, especially numbers which revolve
around management discretion.
Companies need to do more than just appoint auditors.
There has to be a culture of transparency which should then
reflect in its accounting practices.
Additionally, for companies with boards, appointing independent
directors is a good step in trying to make the accounting practices
more transparent.
 REFRENCES
Blum, J. A., 2014. FINANCIAL HAVENS,BANKING SECRECY AND
MONEY LAUNDERING,Geneva: UNDP
Gandel, S., 2015. Valeants accounting problems: It gets worse.
[Online] Available at: http://fortune.com/2015/10/22/valeant-
accounting- problems/ [Accessed May 2017].
Helfand, C., 2015. Valeant's price-hike strategy goes far
beyond two high-profile increases. [Online]Available at:
http://www.fiercepharma.com/pharma/valeant-s- price-hike-
strategy-goes- far-beyond-two- high-profile- increases [Accessed
Mat 2017].
Katz, D., 2015. Accounting Rife with Estimates Haunted Toshiba.
[Online]
Available at: http://ww2.cfo.com/financial-reporting-
 REFRENCES
Mellon, C., 2010. The Canadian Fraud Case. [Online] Available at:
https://www.cs.cmu.edu/~dst/Amway/AUS/canada.htm
[Accessed May 2017].
Prichard, J., 2008. Amway angling for a comeback from pyramid
scheme accusations in U.S. [Online] Available at:
http://www.pottsmerc.com/article/MP/20081228/FINANCE01/312
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[Accessed May 2017].
Reuters, 2016. Foreign Investors Sue Toshiba over Accounting
Scandal. [Online]Available at:
http://fortune.com/2016/10/13/toshiba-accounting- scandal-
lawsuit/ [Accessed May 2017].
Thielman, S., 2016. Herbalife dodges 'pyramid scheme'