What does financial fraud refer to?

Financial fraud refers to illegal acts of deception that lead to financial loss. This encompasses a wide range of dishonest practices aimed at securing an unfair or unlawful financial gain. Examples of financial fraud include embezzlement, insider trading, Ponzi schemes, and accounting fraud, which can significantly harm individuals or organizations by distorting financial information, misleading investors or stakeholders, and causing financial instability.

The concept is critical within forensic accounting, as identifying and investigating financial fraud is essential for ensuring accountability and transparency within financial systems. Understanding this definition helps reinforce the importance of ethical practices in finance and the need for vigilance against deceptive actions that can undermine trust in financial reporting and markets.