What Is the Definition of Management Fraud?

Management fraud may involve falsifying financial information, such as transactions, trades and accounting entries in order to benefit the perpetrator of the crime. Insider trading, bribes, back dating of stock options and misuse of company property for personal gain are also fraudulent.

Companies should look out for signs of fraud within the company. Signs can include someone living beyond their means and changes in their behavior. Those that commit management fraud are often very self-centered and attribute success to money and believe that they are above being held accountable. Those with debts from gambling or drug habits, or those that have lost a lot of money in stocks and shares are also at risk of fraudulent behavior in order to recoup their finances.