Within a few recent months we have witnessed a number of economic affairs connected with the falsification of financial statements of huge American companies. However, financial statements falsification has got a global, and not only American dimension. In the age of globalisation this sickness undoubtedly does not recognise borders. Also in Poland accounting manipulations and 'understanding' audit are probably not rare cases.

The recent events provide a good pretext to ask a question regarding the scope and used methods of financial statements falsification by businesses. If this phenomenon is going to intensify then there is no doubt that the market, as the basic recipient of financial statements, will no longer consider them as a reliable source of information on the position of businesses. The paper presents certain general mechanisms of performing manipulations and betraying the principles binding both the entities drawing up financial statements and also auditors responsible for their reliable audit.

The objective of falsification of the picture of economic reality and most frequent circumstances favourable to resort to unfair methods have been presented. Enormous role of external auditors and legal strengthening of their activities, as well as the ethical dimension of statements' auditing have been mentioned.

The paper presents the object of falsification, and also accounting concepts (economic content, accrual basis, conservative valuation, going concern, and materiality) and methods of betraying them, resorted to by falsifiers.

Difficulties connected with disclosing the cases of financial statements falsification, the impact on effective allocation of resources in the market economy, and also criminal implications resulting from Polish Criminal Code both to statements' falsifiers and to auditors unreliably auditing them have also been mentioned.