Abstract
The study examines the Consequence of Falsification of information in financial statements, with a particular focus on the banking sector. Financial statement Falsification, whether through deliberate manipulation or unethical reporting practices, has been identified as a major factor undermining stakeholder confidence, investor decisions, and operational efficiency in organizations. The study aimed to: (i) determine the means through which financial statements are altered or misrepresented, (ii) identify the factors that induce such Falsification, and (iii) assess the Consequences of misrepresented financial information on banking operations. A descriptive survey research design was adopted, with data collected from 150 accounting and finance professionals across selected banks using a structured questionnaire. The questionnaire comprised two sections: demographic information and Likert-scale items corresponding to the research objectives. Data were analyzed using descriptive statistics, including mean scores and percentages, as well as inferential statistics such as correlation and regression analysis to test the research hypotheses. Findings revealed that financial statements are frequently manipulated through revenue inflation, deferral of expenses, and aggressive accounting policies. Key factors driving Falsification include lack of staff motivation, pressure to meet financial targets, weak internal controls, and ethical lapses. The study also established that misrepresented financial statements significantly affect banking operations, investor confidence, creditor decisions, and organizational reputation. Furthermore, it was observed that prevention of Falsification is a collective responsibility involving auditors, management, and internal control units. The study concludes that robust internal controls, ethical staff practices, and collective accountability are essential to mitigating financial statement Falsificatio
References
Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365–383. Nwokoma, O. S. (2020). Financial reporting fraud in Nigerian companies: Causes and remedies. Journal of Accounting and Auditing Research, 8(2), 45–59. Rezaee, Z. (2005). Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting, 16(3), 277–298. Creswell, J. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches (4th ed.). Sage Publications. Etikan, I., Musa, S. A., & Alkassim, R. S. (2016). Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5(1), 1– Gliem, J. A., & Gliem, R. R. (2003). Calculating, interpreting, and reporting Cronbach’s alpha reliability coefficient for Likert-type scales. Proceedings of the Midwest Research to Practice Conference in Adult, Continuing, and Community Education, 82–88. Albrecht, W. S., Albrecht, C. O., & Albrecht, C. C. (2008). Fraud examination. Cengage Learning. Beneish, M. D. (1999). The detection of earnings manipulation. Financial Analysts Journal, 55(5), 24–36. Cressey, D. R. (1953). Other people’s money: A study in the social psychology of embezzlement. Free Press. Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research, 13(1), 1–36. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman. Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365–383. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting (17th ed.). Wiley. Nwokoma, O. S. (2020). Financial reporting fraud in Nigerian companies: Causes and remedies. Journal of Accounting and Auditing Research, 8(2), 45–59. Ogbonna, G. N., & Appah, E. (2012). Fraud and fraudulent practices in Nigerian banking industry. Research Journal of Finance and Accounting, 3(5), 6–13. Rezaee, Z. (2005). Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting, 16(3), 277–298. Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374. Wells, J. T. (2017). Principles of fraud examination (5th ed.). Wiley. Nyor, T. E., & Olayinka, O. A. (2015). Financial misstatement and investment decision: Evidence from Nigerian capital market. International Journal of Accounting Research, 3(2), 12–20. Albrecht, W. S., Albrecht, C. O., & Albrecht, C. C. (2008). Fraud examination. Cengage Learning. Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365–383. Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting (17th ed.). Wiley. Nwokoma, O. S. (2020). Financial reporting fraud in Nigerian companies: Causes and remedies. Journal of Accounting and Auditing Research, 8(2), 45–59. Rezaee, Z. (2005). Causes, consequences, and deterrence of financial statement fraud. Critical Perspectives on Accounting, 16(3), 277–298. Wells, J. T. (2017). Principles of fraud examination (5th ed.). Wiley. Barman, R. D. (2023). Financial statement: A tool to evaluate business performance. Vilnius Gediminas Technical University. Abdul-Baki, Z. (2023). Resisting institutionalized corruption: The case of public sector auditors in Nigeria. Journal of Accounting and Public Sector Studies. Edosa, M., & Ogbaisi, S. A. (2024). Do audit firm characteristics influence fraudulent financial reporting in Nigeria? NDA Journal of Management Sciences Research, 4(1), 171–180. Fatoki, Y. (2023). Penalising auditors for false financial statements. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4336464 Investopedia. (2025). Detecting financial statement fraud. https://www.investopedia.com/articles/financial-theory/11/detecting-financial- fraud.asp Investopedia. (2025). Understanding Falsification: Types, impacts, and remedies. https://www.investopedia.com/terms/m/Falsification.asp Nwanaka, C. (2022). The Consequence of forensic accounting and financial statement fraud minimization in Nigeria. BW Journal of Business and Management. https://www.bwjournal.org/index.php/bsjournal/article/view/633/562 Oyinlola, A. O. (2010). The role of auditors in fraud detection. DigitalCommons@University of Nebraska– Lincoln. https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1456&context=li bphilprac Scribd. (2025). Consequence of Falsification of information in a financial statement. https://www.scribd.com/document/435610883/Consequence-OF- Falsification-OF-INFORMATION-IN-A-FINANCIAL-STATEMENT-docx ZLK. (2025). Understanding misleading financial statements. https://zlk.com/learn?p=understanding-misleading-financial-statements Classgist. (2025). Consequence of Falsification of information in a financial statement. https://www.classgist.com/projectdetails.aspx?id=218
