Fraud case at battery manufacturer Ener1

This is a constructive analysis of the Fraud case at battery manufacturer Ener1 and allow me to add fraudulent financial reporting is the intentional misstatement or omission of amounts or disclosures from financial reports to deceive financial statement users (Persons, 1995).  This can be accomplished by either manipulating accounting records used to prepare the financial statements, misrepresenting transactions or information from the financial statements or Intentional misapplication of accounting principles in the financial statements. One method fraudulent financial reporting can occur is through the incorrect recognition of revenue. Depending on the circumstances, an organization may want to either overstate or understate revenue.  Such circumstances may include meeting budgeted amounts, the pressure to generate positive operating results to make the organization look better, or to show less revenue to make the organization look as though it needs more assistance than actual (Persons, 1995).  Often, the manipulation of revenue is accomplished by failing to report receivables in the proper period or holding records open beyond the period end date to inflate revenues, and that’s exactly how the three executives misappropriate the firm’s revenue. 

Reference 

Persons, O. S. (1995). Using financial statement data to identify factors associated with fraudulent financial reporting. Journal of applied business research, 11, 38-38.