What type of fraud involves manipulating the financial records to mislead stakeholders?

Financial statement fraud involves manipulating and misrepresenting financial records to deceive stakeholders such as investors, creditors, and regulatory authorities. This type of fraud may include techniques like falsifying revenue, inflating assets, or understating liabilities in order to present a more favorable picture of a company's financial health than is actually the case.

By distorting financial statements, organizations aim to influence decision-making by stakeholders, potentially resulting in ill-gotten gains or avoiding unfavorable outcomes. This type of fraud is particularly damaging because it undermines the trust and integrity that are essential for the functioning of financial markets and the economy as a whole.

Other forms of fraud, such as asset misappropriation or payroll fraud, typically involve direct theft or misappropriation of resources. Corruption fraud often entails collusion and bribery rather than financial manipulation. While these types can have their own severe impacts, they do not specifically focus on the fraudulent alteration of financial records aimed at misleading stakeholders in the same way that financial statement fraud does.