Internal Audit and its Role in evaluating the Risk of Financial Statement Manipulation in the Area of Costs, based on a Case Study of a Chosen Accounting Unit
Zita Drábková, Zdenka Volkánová

Language: en
Last modified: 2017-03-13


The basic purpose of accounting statements is to accurately and truthfully show reality. For most interested parties, accounting data is one of the essential sources of information about a company. Financial statements are also the fundamental source of information for managers and Corporate Governance for company management.  The risk of deceptive account reporting or “improving” financial results has been confirmed by many instances of international research done by large auditing companies, and also relates to subjects based in the Czech Republic. The reasons for using dishonest techniques, creative accounting, and deceptive reporting could be many, for example the necessity of reaching specific figures and criteria for parent companies, creditors, and banks. Internal audits and internal control systems should detect creative accounting methods that are far from accurate and truthful, together with accounting fraud, and at the same time prevent companies from acting accordingly. This contribution analyses accounting unit cost which has been causing accounting loss and poor financial health of chosen trade corporations for a long time. At the same time it evaluates specific findings in the area of spending efficiency in connection with revenues. Furthermore, the contribution summarizes aspects of using creative accounting techniques in the area of costs, and the impact of changes in their management including impacts on the efficiency of internal audits and set accounting units control systems.


Risk of accounting statements manipulation; Internal control system; Internal audit

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