Introduction Financial disclosure is defined as the deliberate misrepresentation of the financial position of a business entity resulting from omission, disclosure, or misstatement of financial reports. It is done in an attempt to deceive or mislead stakeholders. Financial disclosure amounts to accounting abuse and fraud within organizations. Financial misrepresentation is linked to management fraud since it is the managements’ responsibility to ensure financial reporting is carried out to satisfy relevant stakeholders. Financial reporting is useful to shareholders, employees, debtors, and creditors. If they are doctored, issues about loss of confidence arise. Companies equally lose credibility within the markets and industries they operate in (Belkaoui 2004, p.224). Financial disclosure fraud takes many different forms. It may occur in exaggerating revenues, concealing losses, liabilities, and expenses, covering up related party transactions, improper asset valuation (resulting from poor estimation), and failure to disclose related party transactions. The most common is overstating company revenues and profits to depict that the company is doing well. Understatement of revenue is done by companies to reduce their tax liability. Financial disclosure issues arise due to several reasons. However, early awareness through detection of warning signs can be instrumental in guarding the firm against fraud and possible collapse in the long run (Nikolai, Bazley& Jones 2010, p.341). Financial disclosure issues Financial disclosure issues occur due to moral decay, ethical dilemmas, greed, and pressure to perform and remain relevant in markets in which entities operate. It gives a false justification which makes the act committed seem right as long as it protects the interests of the firm in the eyes of stakeholders (Saudagaran 2009, p.23). These issues may also be a result of market pressures to perform and boost investor confidence. Financial disclosure issues force management to commit the same act for subsequent years hence making it recurrent. This implies that all forms of reporting will be falsified and this hides the true financial position of the firm in terms of profits and revenues. The reasons leading to financial disclosure issues are discussed below. Obtaining financing from lenders Directors may falsify financial reporting for building ‘flowery’ portfolios and impressive cash flows. In this case, possible lenders provide financing based on revenue, profits, assets, and liabilities reported. If the company demonstrates upward growth and performance is favorable, it can obtain funding to undertake any investments they desire. Greed and personal motives Sometimes management and directors use company finances to advance their interests and engage in malicious dealings. Directors may engage in gambling and personal investments which they finance using company money. Misuse of funds is usually driven by the fact that the management or directors want to make quick money in the shortest time possible. If the directors use business funds, they should report this in proper books of accounts by posting debits and corresponding credits. Some members of management may engage in corruption to attain monetary gratification throug