Certified Fraud Examiner 2025 – 400 Free Practice Questions to Pass the Exam

The purpose of concealing liabilities or expenses in fraud schemes is primarily to mislead investors and auditors. By hiding these financial obligations or costs, individuals engaging in fraudulent activities can create a false picture of a company's financial health. This deception may lead stakeholders, such as investors and auditors, to believe the organization is performing better than it truly is, potentially influencing decisions related to investment, lending, and compliance.

When liabilities or expenses are concealed, the company's reported profits appear higher, which can inflate stock prices and affect the company's overall market performance. Such misleading financial statements compromise the trust that stakeholders place in the company’s leadership and can have serious repercussions in the long run, including legal consequences and loss of credibility.

While improving company reputation, increasing profit margins, and enhancing employee satisfaction might seem like potential motivations for concealment, they are secondary outcomes often resulting from the primary intention to mislead. The most direct and immediate aim of this deceitful action is to create an illusion of financial strength to deceive key external parties.