Employees submitting false reports on a company’s financial status is not an uncommon issue in practice and may expose enterprises to incorrect decision-making and serious legal risks. Such conduct may arise from work pressure, lack of professional competence, or intentional acts of concealing information. The following article clarifies the nature, consequences, and relevant legal provisions regarding employees submitting false financial reports of a company, while also suggesting effective handling approaches for enterprises.

I. Current situation regarding employees submitting false reports on a company’s financial status

In practice, the situation where employees submit false reports on a company’s financial status has occurred in various types of enterprises, ranging from small-scale enterprises to large corporations. Misstatements may take many forms, such as improper revenue recognition, concealment of expenses, or even fabrication of reports. Notably, in some cases, such conduct does not stem from fraudulent intent but rather from limited professional expertise, insufficient internal control, or pressure to meet financial targets imposed by superiors.

Internal control and supervisory systems in many enterprises remain relatively weak, creating conditions for employees to submit false financial reports without timely detection. Once such inaccuracies are discovered, enterprises not only suffer financial losses but also face significant reputational damage, particularly in relations with investors, shareholders, and regulatory authorities.

II. Concept of employees submitting false reports on a company’s financial status

1. What does it mean when employees submit false financial reports of a company?

Employees submitting false reports on a company’s financial status refers to individuals within the enterprise, who typically work in accounting, finance, or management departments, prepare, present, or provide financial information that does not accurately reflect reality. Such conduct may include misstatement of revenue, expenses, or profits; concealment or manipulation of figures; or provision of dishonest reports for personal gain, following instructions, or due to lack of expertise.

False reporting may be intentional or unintentional, but in all cases it may lead to incorrect business decisions, affect the rights and interests of relevant parties, and create significant legal risks.

2. What causes may lead to false financial reporting?

False financial reporting may arise from various subjective and objective factors. A common cause is pressure to meet financial targets or instructions from superiors, which leads employees to adjust figures to beautify reports. In addition, personal gain motives such as concealing violations, self-interest, or job security may also lead to intentional misreporting.

Furthermore, professional limitations and management system weaknesses also contribute significantly. Employees lacking experience, misunderstanding accounting standards, or not updating legal regulations in time may unintentionally prepare inaccurate reports. At the same time, weak internal control mechanisms and loose verification procedures within enterprises create favorable conditions for errors or fraud to occur without timely detection.

3. Which parties may be affected by false financial reporting?

First, the enterprise itself may suffer from incorrect management decisions, leading to financial losses, reputational damage, and potential legal liability. Second, shareholders and investors, who rely on financial statements to assess business performance and make investment decisions, may face risks of losses or missed opportunities.

In addition, State authorities, business partners, banks, and even employees may be affected, as inaccurate financial information may distort tax obligations, repayment capacity, and the actual financial condition of the enterprise.

III. Legal regulations relating to employees submitting false reports on a company’s financial status

1. What acts are considered falsification of corporate financial data?

Acts considered falsification of corporate financial data typically include:

  • Misstatement of revenue, expenses, or profits, such as recording fictitious revenue, delaying expense recognition, or misallocating accounting periods;
  • Intentionally providing dishonest information or preparing financial statements that do not reflect the actual business situation;
  • Concealing or failing to fully record economic transactions, resulting in incomplete or distorted financial data;
  • Forging, altering, or destroying accounting documents to legitimize inaccurate figures;
  • Maintaining multiple accounting systems or providing inconsistent reports to different parties;
  • Destroying, losing, or intentionally damaging accounting records before the legally required retention period expires.

2. Can incorrect financial statements be resubmitted or corrected?

Incorrect financial statements do not eliminate the right to resubmit them; however, the law imposes an obligation to correct such errors. According to Article 29 of the Law on Accounting 2015, financial statements must be truthful, complete, and accurate, and the preparer and signatory are responsible for the information provided. Thus, upon discovering errors, the enterprise must prepare corrected statements or adjustments to ensure accuracy.

If financial statements have already been submitted to tax authorities, resubmission is implemented through the mechanism of supplementary tax declarations in accordance with Clause 5, Article 12 of the Law on Tax Administration 2025, allowing taxpayers to adjust declared information upon detection of errors.

3. Can employees be fined for false financial reporting?

Employees who prepare or submit false financial reports may be subject to sanctions depending on the nature and severity of the violation. Disciplinary measures may be imposed under the Labor Code 2019. In addition, administrative sanctions or criminal liability may also apply.

Specifically, intentional false financial reporting may be subject to administrative sanctions under Point a, Clause 1, Article 11 of Decree No. 41/2018/ND-CP if it does not reach the threshold of criminal liability. If fraudulent conduct is intended for personal gain and causes serious damage, criminal liability may be imposed under Article 221 of the Penal Code 2015 (as amended in 2017 and 2025) regarding the offense of violating accounting regulations causing serious consequences.

4. How to correct false financial reports of a company?

The correction of false financial reports must be implemented in accordance with accounting and tax regulations. First, the enterprise must identify the nature of the error (material or immaterial, intentional or unintentional) and review all relevant documents.

If reports have already been submitted to tax authorities, the enterprise must submit supplementary tax declarations under Article 47 of the Law on Tax Administration 2025, including amended tax returns, revised financial statements, and explanations of discrepancies. Such supplementation must be made before the tax authority issues a decision on inspection or audit in order to qualify for self-correction mechanisms.

Enterprises are fully entitled to correct inaccurate reports; however, such corrections must comply with accounting principles, ensure proper restatement, and transparently disclose all errors to minimize legal risks.

IV. Questions relating to employees submitting false reports on a company’s financial status

1. What consequences can false financial reporting cause for an enterprise?

False financial reporting can lead to numerous serious consequences for an enterprise in legal, financial, and reputational aspects:

  • Direct economic losses: Misstated figures may cause management to make incorrect investment, cost, or cash flow decisions, resulting in losses, inefficient resource allocation, or financial imbalance.
  • Loss of credibility and trust: Shareholders, investors, partners, and banks may lose confidence in the enterprise if financial information is not truthful, thereby reducing the ability to raise capital, expand business operations, or maintain cooperative relationships.
  • Internal impact: Employees may be indirectly affected, ranging from adjustments in salary and bonuses, reduction of benefits, to potential job losses if the enterprise encounters financial difficulties caused by decisions based on inaccurate data.
  • Legal risks: If false reporting leads to tax underpayment, misrepresentation, or violations of accounting standards, the enterprise may be subject to administrative sanctions or even criminal liability in serious cases.
  • Long-term consequences: When the credibility and transparency of financial reporting are compromised, the enterprise may face difficulties in audits, bank loans, participation in bidding processes, or market expansion, thereby affecting sustainable development.

2. If an employee follows a superior’s instructions to submit false reports, will they still take liability?

If an employee follows a superior’s instructions to submit false financial reports, legal liability depends on the individual’s role, level of involvement, and intent. An employee remains personally liable if they are aware that the conduct is unlawful but still proceed. The argument of “following orders” does not fully exempt liability, especially where the conduct causes serious consequences. Under Clause 2, Article 13 of the Law on Accounting 2015, the preparation of untruthful financial statements is a prohibited act. Thus, employees who knowingly prepare false reports under instructions still violate the law.

If the employee can demonstrate a lack of decision-making authority, coercion, or that they attempted to refuse or reported the issue, investigative or auditing authorities may consider mitigating liability. Conversely, if the employee is complicit and fully aware of the fraudulent nature of the conduct but still participates, they will be held fully liable under applicable laws.

3. Do enterprises have an obligation to inform shareholders upon discovering false financial reports?

Upon discovering false financial reports, enterprises are obligated to promptly inform shareholders, as it constitutes material information directly affecting their rights and interests. Under Clause 4, Article 31 of the Law on Accounting 2015, financial statements must be disclosed. If previously submitted reports are found to be incorrect, the enterprise must correct them and notify relevant stakeholders, including shareholders.

 

When false financial reporting is detected, the enterprise must disclose adjusted information and provide revised financial statements to shareholders to ensure transparency and protect shareholders’ decision-making rights. Failure to disclose may result in legal liability for corporate managers and damage the enterprise’s reputation before shareholders, investors, and regulatory authorities.

4. How is an employee handled if false reporting is discovered after resignation?

If an employee has already resigned but is later found to have engaged in false reporting, the enterprise may still pursue liability depending on the severity of the violation. First, the enterprise must review, verify, and collect evidence to determine the nature of the conduct (whether negligent or intentional) and assess the extent of damage. Regarding liability, even after resignation, the individual may still be required to compensate for damages caused to the enterprise in accordance with Article 584 of the Civil Code 2015. If the conduct shows signs of legal violations (such as fraud or serious misstatement of data), the enterprise may report the matter to competent authorities for administrative sanctions or criminal prosecution.

At the same time, the enterprise must promptly correct its financial statements, remediate consequences, and notify relevant parties where necessary to minimize legal risks and protect its reputation.

5. Does an employee have the right to refuse unlawful requests to manipulate financial data?

Employees have the full right to refuse requests to manipulate financial data that are contrary to the law. According to Clause 2, Article 13 of the Law on Accounting 2015, the provision or confirmation of untruthful accounting information is strictly prohibited. Accounting professionals also have the right to professional independence and may refuse unlawful instructions, while also being obliged to report such matters to competent authorities.

Thus, refusal is not only a right but also a legal responsibility to ensure the integrity and accuracy of financial information.

V. Why should enterprises seek legal advice from NPLaw in cases involving false financial reporting by employees?

NPLaw assists enterprises in properly assessing legal risks and determining liability when false financial reporting occurs. Its legal team provides tailored solutions to mitigate damages and ensure compliance with applicable laws. In addition, NPLaw offers preventive advisory services to help enterprises strengthen internal controls and better manage financial risks.

False financial reporting by employees not only causes internal losses but also creates significant legal risks for enterprises. Therefore, businesses should proactively monitor, detect, and address such issues in a timely manner to minimize consequences. At the same time, strict compliance with accounting regulations and the establishment of robust internal control systems are key factors for sustainable development. Proactive prevention helps enterprises protect their reputation and ensure long-term stability.

The above information is for reference purposes only. Should you require detailed advice regarding a specific case, please contact NPLaw for prompt legal assistance.