{"id":6430,"date":"2026-11-12T08:32:18","date_gmt":"2026-11-12T07:32:18","guid":{"rendered":"https:\/\/teamkindl.com\/?p=6430"},"modified":"2026-11-12T08:44:45","modified_gmt":"2026-11-12T07:44:45","slug":"fraud-cases-in-companies-banks-and-insurance-firms-how-white-collar-crime-can-create-or-falsely-report-assets-conceal-losses-and-improve-financial-results","status":"publish","type":"post","link":"https:\/\/teamkindl.com\/en\/blog\/fraud-cases-in-companies-banks-and-insurance-firms-how-white-collar-crime-can-create-or-falsely-report-assets-conceal-losses-and-improve-financial-results\/","title":{"rendered":"Fraud Cases in Companies, Banks, and Insurance Firms: How White-Collar Crime Can Create or Falsely Report Assets, Conceal Losses, and Improve Financial Results"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\">Introduction<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A shortfall becomes an apparent receivable, the receivable becomes an apparent credit balance\u2014and this credit balance is \u201ccovered\u201d again by further journal entries. What looks like a cash flow is, in reality, merely a chain of journal entries with no real value. Such fictitious entries can occur not only in banks and insurance companies but also in businesses of any size and industry: in the form of fictitious sales, fictitious receivables, overstated inventory, forged documents, or concealed withdrawals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This article explains how such malpractices work, who carries them out and for what motives, how management, the executive board, the supervisory board, internal audit, and auditors can identify them, and how and why fraud investigations, forensic services, and white-collar crime law work together to uncover them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What are fictitious journal entries?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Fictitious entries are accounting entries that are not based on a real business transaction or that deliberately misrepresent a business transaction. Fictitious entries can lead to fictitiously created cash flows: accounts, supporting documents, and balance sheet items are linked in such a way that a closed payment cycle is created, even though no money actually changes hands. The cycle exists only in the accounting system.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It does not replace a real economic transaction but rather shifts a shortfall or a fictitious value from one account to the next. Any shortfall therefore does not disappear\u2014it merely changes its form in the accounting records.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How does a fictitious entry differ from a real entry?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A proper entry reflects an actual business transaction and is supported by verifiable documentation, authorizations, and payment data. A fictitious entry lacks this real-world basis: the entry merely creates the appearance that an account has been balanced, a receivable has been written off, or revenue has been generated. This disconnect between the accounting entry and economic reality makes the issue relevant to white-collar crime, internal auditing, and corporate criminal law.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What forms of fictitious entries exist in companies?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Fictitious entries usually pursue one of three objectives: to create or simulate assets, to conceal losses, or to improve financial results. Typical examples include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fictitious revenue and receivables: Invoices issued to real or fictitious customers for which no delivery has taken place inflate revenue and earnings.<\/li>\n\n\n\n<li>Intra-group transfers: Goods or services are fictitiously transferred within the group without any actual delivery or service rendered; each level shows increased revenue or expenses, but no actual value is created.<\/li>\n\n\n\n<li>Overvalued inventory and capitalized expenses (services not yet billed): Inventory, projects, or development costs are overstated, and expenses are deferred to the future.<\/li>\n\n\n\n<li>Cover-up invoices and fictitious suppliers: Payments to shell companies or related parties are recorded as operating expenses; the money actually leaves the company, but the service was never rendered.<\/li>\n\n\n\n<li>Disguised withdrawals: Cash outflows are \u201cparked\u201d via clearing accounts, loans to shareholders, or fictitious advance payments.<\/li>\n\n\n\n<li>In banks and insurance companies: \u201cfictitious loans\u201d (loans to non-existent individuals or fictitious loans to real individuals), unauthorized withdrawals from customers\u2019 bank accounts (withdrawals of deposits), fictitious investments, or incorrect provisions.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Who commits fraud, and what are their motives?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Fraud is often perpetrated by individuals who are trusted and have extensive authority: managing directors and board members, division heads, heads of accounting, controllers, long-tenured accounting staff, as well as sales managers or external partners acting in collusion with employees. The so-called \u201cfraud triangle\u201d serves as a practical explanation:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Pressure or incentive: profit and budget targets, bonuses tied to key performance indicators, the threat of loan termination for breaching covenants, an impending sale of the company, or personal financial problems.<\/li>\n\n\n\n<li>Opportunity: Weak internal controls, lack of segregation of duties, broad system access rights, dominant individuals, and insufficient oversight by supervisory bodies.<\/li>\n\n\n\n<li>Rationalization: <em>\u201cThis is only temporary<\/em>,\u201d <em>\u201cI\u2019ll make it up next quarter,<\/em>\u201d or <em>\u201cI\u2019m saving the company and the jobs by doing this<\/em>.\u201d<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What warning signs are relevant for management, the executive board, the supervisory board, internal audit, and external auditors?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Possible indicators of embezzlement or objective anomalies include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>recurring reclassifications and manual entries shortly before reporting deadlines,<\/li>\n\n\n\n<li>sales spikes at the end of the period followed by credit memos or reversals shortly thereafter,<\/li>\n\n\n\n<li>sharp increases in accounts receivable without corresponding incoming payments,<\/li>\n\n\n\n<li>missing original receipts, delivery notes, or balance confirmations,<\/li>\n\n\n\n<li>new customers or suppliers without verifiable master data, identification, or a business relationship,<\/li>\n\n\n\n<li>Offsetting entries without external proof of payment,<\/li>\n\n\n\n<li>unusual document, check, or settlement transactions, particularly with related companies,<\/li>\n\n\n\n<li>balances that are regularly \u201cadjusted\u201d by new loans, deposit movements, intra-group settlements, or interbank positions,<\/li>\n\n\n\n<li>Key performance indicators that are performing significantly better than the industry average, cash flow, and order backlog,<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">A single warning sign does not in itself prove financial statement fraud or economic crimes. It is only the overall picture\u2014comprising journal entries, supporting documents, account master data, approvals, payment transaction data, and internal communications\u2014that provides meaningful insight. As part of the forensic investigation, we reconstruct what was posted, who initiated the posting, what supporting documentation is supposed to back it up, and whether money was actually transferred.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What impact do fictitious entries have on the balance sheet and key financial ratios?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A balance sheet may add up mathematically yet still be economically inaccurate. Fraudulent entries not only alter balance sheet items but also\u2014depending on the intended goal\u2014overstate revenue or expenses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Often, no money actually leaves the company in cases of balance sheet fraud. Rather, the damage arises from falsified financial ratios: These form the basis for bonus calculations, credit decisions, and covenants; company valuations and sales negotiations; investment decisions by investors; as well as subsidies or distributions. The recipients of financial statements\u2014shareholders, investors, banks, business partners, depositors, and regulatory authorities\u2014thus do not receive a reliable picture of the company\u2019s financial position, financial performance, and results of operations. Balance sheet analysis must therefore go beyond the accounting entries and examine the actual value.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Who bears the loss?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Economically speaking, the outflowed funds are still missing from the company. When results are merely embellished, the damage is borne by those who relied on the false figures: buyers of company shares who pay an inflated purchase price, banks that grant loans based on false financial statements, shareholders who finance unjustified bonuses or distributions, as well as suppliers and employees in the event of a subsequent bankruptcy. In the banking and insurance sectors, the consequences ultimately fall on depositors, policyholders, and other creditors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For those affected, it is important to distinguish between economic loss and the legal allocation of claims: Whether a recoverable loss exists, against whom claims can be made, and how they are enforced depends on the contractual relationship, the status of the proceedings, and the evidence. In the event of insolvency, deadlines and the proper filing of claims are also critical.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What rights do customers have regarding deposit insurance and investor compensation?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If a bank is affected, a distinction must be made between deposit insurance and investor compensation. Which provision applies depends on whether a protected deposit or a covered securities service is involved and whether the statutory trigger event has occurred. It is not possible to make a blanket statement based solely on balance sheet manipulation. Affected parties should secure their contracts, account statements, securities account documents, and payment receipts, and have them reviewed to determine which scope of protection applies to their claim.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What role do white-collar crime law and forensic analysis play in the investigation?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The two complement each other: fraud investigations and forensic services help uncover criminal acts. They reconstruct cash and accounting flows and verify whether transactions have a real economic value. Legal analysis classifies breaches of duty and criminal liabilities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Terms such as fraud, balance sheet fraud, embezzlement, or money laundering must not be hastily or broadly inferred from accounting patterns. Whether an offense under Austrian criminal law has been committed depends on provable actions, responsibilities, knowledge, and intent. A proper investigation distinguishes between documented facts, mathematical inferences, and legal assessments\u2014serving as the basis for criminal, civil, and insolvency proceedings.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion: Fictitious entries do not replace actual cash flow<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Fictitious entries show apparent revenues and shift risks to shareholders, investors, creditors, and other affected parties. The longer they remain undetected, the greater the financial shortfall or damage typically becomes. Companies, managing directors, board members, and supervisory bodies that have suspicions should therefore act quickly, secure evidence, and commission an analysis that integrates accounting, evidence, and Austrian commercial and financial criminal law.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How KINDL.trusted helps<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">KINDL.trusted supports companies, corporate bodies, and affected parties<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>in cases of suspected fraud within the company\u2014from the initial assessment through the preservation of evidence to the forensic investigation,<\/li>\n\n\n\n<li>in cases of suspected white-collar crime, such as financial statement fraud, embezzlement, fictitious invoices, or covert asset transfers,<\/li>\n\n\n\n<li>in cases of fraud or fraudulent acts\u2014through the reconstruction of complex payment and accounting flows and their assessment under criminal and civil law.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Contact us for a confidential initial assessment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Contact<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">lease don&#8217;t hesitate to contact our <strong class=\"\">lawyers<\/strong>, <strong class=\"\">tax advisors<\/strong> and <strong class=\"\">generally sworn and court-certified experts<\/strong> in the fields of criminal law, tax law, accounting and business administration for a no-obligation initial consultation:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Vienna, 12.11.2026<\/p>\n\n\n\n<div class=\"wp-block-group is-layout-grid wp-container-core-group-is-layout-9d260ee2 wp-block-group-is-layout-grid\">\n<figure class=\"wp-block-image size-large wp-container-content-69bc4bdf\"><img loading=\"lazy\" decoding=\"async\" width=\"683\" height=\"1024\" src=\"https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-683x1024-1.jpg\" alt=\"\" class=\"wp-image-5905\" srcset=\"https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-683x1024-1.jpg 683w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-200x300-1.jpg 200w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-768x1152-1.jpg 768w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-1024x1536-1.jpg 1024w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Portrait_Mayerhoefer_2000x3000_v2-1-1365x2048-1.jpg 1365w\" sizes=\"auto, (max-width: 683px) 100vw, 683px\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"683\" height=\"1024\" src=\"https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-683x1024.jpg\" alt=\"\" class=\"wp-image-5988\" srcset=\"https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-683x1024.jpg 683w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-200x300.jpg 200w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-768x1152.jpg 768w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-1024x1536.jpg 1024w, https:\/\/teamkindl.com\/wp-content\/uploads\/2026\/10\/Mayr_portrait_Marlis_Wenninger_0046_2000x3000-1365x2048.jpg 1365w\" sizes=\"auto, (max-width: 683px) 100vw, 683px\" \/><\/figure>\n<\/div>\n\n\n\n<div class=\"wp-block-group is-layout-grid wp-container-core-group-is-layout-9d260ee2 wp-block-group-is-layout-grid\">\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/teamkindl.legal\/team\/marc-julian-mayerhoefer\/\">Marc Julian Mayerh\u00f6fer &#8211; KINDL.trusted<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/teamkindl.com\/en\/team\/marlis-wenninger\/\">Marlis Wenninger &#8211; KINDL.trusted<\/a><\/p>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How fictitious transactions and fraudulent acts\u2014such as fraud, breach of trust, and embezzlement by managers, employees, or customers\u2014can conceal losses, embellish results, and create the illusion of wealth\u2014with warning signs, perpetrator profiles, and the role of fraud investigations and forensic services.<\/p>\n","protected":false},"author":6,"featured_media":6427,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[50],"tags":[],"class_list":["post-6430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/posts\/6430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/comments?post=6430"}],"version-history":[{"count":3,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/posts\/6430\/revisions"}],"predecessor-version":[{"id":6433,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/posts\/6430\/revisions\/6433"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/media\/6427"}],"wp:attachment":[{"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/media?parent=6430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/categories?post=6430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/teamkindl.com\/en\/wp-json\/wp\/v2\/tags?post=6430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}