With the global bond market size bigger than many of the world’s biggest economies, it’s important for businesses that sell bonds to understand how to report transactions properly. According to the International Capital Market Association (ICMA), the global bond market’s capitalization is more than $128 trillion.
Defining Bonds
Offered by government or corporate entities, bonds are a static commitment issued to investors. Entities earn money from investors to invest in infrastructure or support operations. Investors receive a coupon payment periodically, and the bond is settled at a future date, which is referred to as the maturity date.
When bonds are tendered, they may be done at a discount, at face value, or at a premium. The valuation relies on the gap at issuance between a bond’s coupon rate and the bond’s yield based on prevailing prices. Upon bond issuance, the bond’s face value is recorded under bonds payable, as the issuing entity receives payment for the bond’s prevailing market value. If there’s a positive difference, it’s recorded at a premium. If there’s a negative difference, it’s recorded at a discount.
Bond Issuance and Accounting Considerations
When sold at par value, after the corporation or government entity receives payment from investors, the issuing entity records it as a liability because it’s liable for the investor’s investment. This would be set up as:
Debit
Credit
Cash
$100
Bonds Payable
$100
Bonds Payable Defined
Since the entity owes the investor, bonds payable is recorded on the liability section of a business’ balance sheet. Much of the time, bonds payable are reported as non-current liabilities.
When sold at a discount, a gap exists between a bond’s par value and the monetary investment the issuing entity obtains from the investor; the issuing entity must record the transaction as a discount on bonds payable account. The journal entry is as follows:
Debit
Credit
Cash
$100
Discount on Bonds Payable
$100
$100
Bonds Payable
$100
If bonds are purchased at a premium, which is when investors pay more for a bond with a higher interest rate, providing higher coupon payments, entities must record it as a premium on bonds payable (POBP) account. It often occurs when purchasers agree to lesser earnings due to the bond having a higher rate than prevailing rates. In the case of a bond’s issuance at a premium, it can be recorded as follows:
Debit
Credit
Cash
$100
POBP
$100
Bonds Payable
$100
If there’s a discount on bonds payable, the recurrent record must reflect the interest expense with a debit transaction and the bonds payable entry must see a credit. This accounting method impacts the bond issuer by growing the total interest expense, which the issuer records.
If, however, the issuer receives payment from investors beyond the face value, the interest expense must be credited, and the premium on bonds payable entry should receive a debit.
Conclusion
Whether it’s a business issuing bonds or an investor evaluating a company, understanding how to account for bonds is essential to evaluate a business’ financial health.
Alan F Burke CPA
How to Account for Bonds
October 1, 2026 · Accounting News, Blog
⏱ 3 min read
With the global bond market size bigger than many of the world’s biggest economies, it’s important for businesses that sell bonds to understand how to report transactions properly. According to the International Capital Market Association (ICMA), the global bond market’s capitalization is more than $128 trillion.
Defining Bonds
Offered by government or corporate entities, bonds are a static commitment issued to investors. Entities earn money from investors to invest in infrastructure or support operations. Investors receive a coupon payment periodically, and the bond is settled at a future date, which is referred to as the maturity date.
When bonds are tendered, they may be done at a discount, at face value, or at a premium. The valuation relies on the gap at issuance between a bond’s coupon rate and the bond’s yield based on prevailing prices. Upon bond issuance, the bond’s face value is recorded under bonds payable, as the issuing entity receives payment for the bond’s prevailing market value. If there’s a positive difference, it’s recorded at a premium. If there’s a negative difference, it’s recorded at a discount.
Bond Issuance and Accounting Considerations
When sold at par value, after the corporation or government entity receives payment from investors, the issuing entity records it as a liability because it’s liable for the investor’s investment. This would be set up as:
Debit
Credit
Cash
$100
Bonds Payable
$100
Bonds Payable Defined
Since the entity owes the investor, bonds payable is recorded on the liability section of a business’ balance sheet. Much of the time, bonds payable are reported as non-current liabilities.
When sold at a discount, a gap exists between a bond’s par value and the monetary investment the issuing entity obtains from the investor; the issuing entity must record the transaction as a discount on bonds payable account. The journal entry is as follows:
Debit
Credit
Cash
$100
Discount on Bonds Payable
$100
$100
Bonds Payable
$100
If bonds are purchased at a premium, which is when investors pay more for a bond with a higher interest rate, providing higher coupon payments, entities must record it as a premium on bonds payable (POBP) account. It often occurs when purchasers agree to lesser earnings due to the bond having a higher rate than prevailing rates. In the case of a bond’s issuance at a premium, it can be recorded as follows:
Debit
Credit
Cash
$100
POBP
$100
Bonds Payable
$100
If there’s a discount on bonds payable, the recurrent record must reflect the interest expense with a debit transaction and the bonds payable entry must see a credit. This accounting method impacts the bond issuer by growing the total interest expense, which the issuer records.
If, however, the issuer receives payment from investors beyond the face value, the interest expense must be credited, and the premium on bonds payable entry should receive a debit.
Conclusion
Whether it’s a business issuing bonds or an investor evaluating a company, understanding how to account for bonds is essential to evaluate a business’ financial health.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
Continuing Appropriations and Extensions Act, 2027 (HR 6500) – This appropriations bill was finalized and passed by both the House and the Senate on Sept. 1. The act funds the fiscal year 2027 government budget through Dec. 11 at current levels. It was signed by the President on Sept. 2.
Prison Staff Safety Enhancement Act (S 307) – This bill is designed to address sexual harassment and sexual assault of Bureau of Prisons correctional officers and other staff by incarcerated prisoners. Specifically, it details national standards for the prevention, reduction, and punishment of perpetrators. The legislation was introduced by Sen. Marsha Blackburn (R-TN) on Jan. 29, 2025. It passed in the Senate on April 29, 2025; in the House on Aug. 31; and was enacted by the president on Sept. 16.
Retire through Ownership Act (S 2403) – Introduced by Sen. Roger Marshall (R-KS) on July 23, 2025, this bill amends the Employee Retirement Income Security Act of 1974. ESOPs are Employee Stock Ownership Plans that enable employees to accrue shares of their employers’ stock as part of a pension plan, in which they receive the cash value of their shares upon retirement. This bill clearly defines how a good-faith valuation should be determined by independent professional appraisers, based on IRS Revenue Ruling 59-60 for valuing privately held stock. In the past, ambiguous valuation methods have resulted in litigation. This act passed in the Senate on October 9, 2025, and in the House on Sept. 16. It currently awaits the president’s signature.
Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (HR 5334) – This largely bipartisan act was championed by the late Sen. Lindsey Graham (R-SC). The legislation imposes a variety of sanctions, tariffs, and prohibitions related to Russia and Iran, and explicitly prohibits U.S. persons from making new investments in Russia. It also expands the tax deduction for early childhood education teachers for classroom expenses. The bill was introduced on Sept. 11, 2025, by Rep. Jimmy Panetta (D-CA). It passed in the House on April 27 and in the Senate on Aug. 7, with final changes agreed upon on Sept. 16. The president signed the bill into law a day later.
Digital Asset Market Clarity Act (HR 3633) – Known as the Clarity Act, the purpose of this Trump Administration-backed bill is to implement the first regulations for the crypto sector. The bill was introduced by Rep. French Hill (R-AR) on May 29, 2025. It passed in the House on July 17, 2025. However, opponents of the bill say the industry-led standards are far too lenient and do not provide enough safeguards. The bill recently failed in the Senate after a party-line cloture vote, which means the debate ended before the floor could vote on the bill (considered a filibuster). The cloture vote does not rule out the Senate trying again at a later date.
Ratepayer Protection Act (HR 9340) – In an effort to rein in AI data center utility costs, this bill would require state utilities to consider adopting standards to ensure cost recovery for the generation, transmission, and distribution services of large-load electricity customers. This high-stakes, bipartisan issue comes ahead of the midterm elections in an effort to assure voters that local data centers will not ramp up local residents’ utility bills. The legislation was introduced by Rep. Gabe Evans (R-CO) on June 18. It passed in the House on Sept. 16 and currently resides in the Senate.
Stopping Political Discrimination in Disaster Assistance Act (HR 1342) – Current law states that federal major disaster emergency relief and assistance must be provided without discrimination on the basis of race, color, religion, nationality, sex, age, disability, English proficiency or economic status. The bill, introduced by Rep. Scott Perry (R-PA) on Feb. 13, 2025, would add political affiliation protection under this requirement. The act passed in the House on Sept. 16 and awaits consideration in the Senate.
Alan F Burke CPA
Pre-Election Focus on Russian/Iran Sanctions, AI Utility Bills, Crypto Regulation and Nondiscriminatory FEMA Assistance
October 1, 2026 · Blog, Congress at Work
⏱ 4 min read
Continuing Appropriations and Extensions Act, 2027 (HR 6500) – This appropriations bill was finalized and passed by both the House and the Senate on Sept. 1. The act funds the fiscal year 2027 government budget through Dec. 11 at current levels. It was signed by the President on Sept. 2.
Prison Staff Safety Enhancement Act (S 307) – This bill is designed to address sexual harassment and sexual assault of Bureau of Prisons correctional officers and other staff by incarcerated prisoners. Specifically, it details national standards for the prevention, reduction, and punishment of perpetrators. The legislation was introduced by Sen. Marsha Blackburn (R-TN) on Jan. 29, 2025. It passed in the Senate on April 29, 2025; in the House on Aug. 31; and was enacted by the president on Sept. 16.
Retire through Ownership Act (S 2403) – Introduced by Sen. Roger Marshall (R-KS) on July 23, 2025, this bill amends the Employee Retirement Income Security Act of 1974. ESOPs are Employee Stock Ownership Plans that enable employees to accrue shares of their employers’ stock as part of a pension plan, in which they receive the cash value of their shares upon retirement. This bill clearly defines how a good-faith valuation should be determined by independent professional appraisers, based on IRS Revenue Ruling 59-60 for valuing privately held stock. In the past, ambiguous valuation methods have resulted in litigation. This act passed in the Senate on October 9, 2025, and in the House on Sept. 16. It currently awaits the president’s signature.
Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (HR 5334) – This largely bipartisan act was championed by the late Sen. Lindsey Graham (R-SC). The legislation imposes a variety of sanctions, tariffs, and prohibitions related to Russia and Iran, and explicitly prohibits U.S. persons from making new investments in Russia. It also expands the tax deduction for early childhood education teachers for classroom expenses. The bill was introduced on Sept. 11, 2025, by Rep. Jimmy Panetta (D-CA). It passed in the House on April 27 and in the Senate on Aug. 7, with final changes agreed upon on Sept. 16. The president signed the bill into law a day later.
Digital Asset Market Clarity Act (HR 3633) – Known as the Clarity Act, the purpose of this Trump Administration-backed bill is to implement the first regulations for the crypto sector. The bill was introduced by Rep. French Hill (R-AR) on May 29, 2025. It passed in the House on July 17, 2025. However, opponents of the bill say the industry-led standards are far too lenient and do not provide enough safeguards. The bill recently failed in the Senate after a party-line cloture vote, which means the debate ended before the floor could vote on the bill (considered a filibuster). The cloture vote does not rule out the Senate trying again at a later date.
Ratepayer Protection Act (HR 9340) – In an effort to rein in AI data center utility costs, this bill would require state utilities to consider adopting standards to ensure cost recovery for the generation, transmission, and distribution services of large-load electricity customers. This high-stakes, bipartisan issue comes ahead of the midterm elections in an effort to assure voters that local data centers will not ramp up local residents’ utility bills. The legislation was introduced by Rep. Gabe Evans (R-CO) on June 18. It passed in the House on Sept. 16 and currently resides in the Senate.
Stopping Political Discrimination in Disaster Assistance Act (HR 1342) – Current law states that federal major disaster emergency relief and assistance must be provided without discrimination on the basis of race, color, religion, nationality, sex, age, disability, English proficiency or economic status. The bill, introduced by Rep. Scott Perry (R-PA) on Feb. 13, 2025, would add political affiliation protection under this requirement. The act passed in the House on Sept. 16 and awaits consideration in the Senate.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
For years, corporate fraud was limited by the costs, expertise, and resources required to carry out a convincing deception. Artificial intelligence (AI) has changed this.
Today, AI can create realistic voices, videos, emails, invoices, identities, and customer interactions at a scale and speed that traditional fraud controls were never designed to address. AI-powered fraud is a governance, financial, and strategic risk – not just an IT problem.
The Evolution of Corporate Fraud
Fraud is no longer limited to static phishing emails. Threat actors, from organized criminal syndicates to rogue insiders, use large language models and advanced machine learning to execute complex, multilayered fraud schemes.
One of the most cited reference cases is the 2024 Arup incident. A finance employee at the engineering firm’s Hong Kong office was tricked into transferring about $25 million across multiple transactions after joining a video conference call with deepfake replicas of the company’s CFO and other colleagues. The fraud succeeded because it targeted the human authorization step, the exact step where financial controls assume identity can be trusted on sight and sound.
Beyond deepfake executives, new trends include synthetic vendor creation, where generative models fabricate entire corporate entities. Each comes complete with tax IDs, websites, regulatory filings, and executive profiles. They are used to infiltrate accounts payable systems. Bad actors also use machine learning to reverse-engineer enterprise anti-fraud algorithms, find blind spots, and execute micro-transactions that stay beneath detection thresholds.
Why the Numbers Should Worry Boards, Not Just Security Teams
The 2026 INTERPOL Global Financial Fraud Threat Assessment flagged AI-powered fraud as one of organized crime’s primary growth sectors. It reports that fraud alerts have risen 54 percent since 2024, with more than 1,500 cross-border cases involving $1.1 billion in lost assets.
The Regulatory Gap Executives Should Worry About
Regulation is accelerating, but it is not solving the fraud problem. The EU AI Act’s transparency provisions took effect Aug. 2. It requires the disclosure of AI-generated content, with penalties for noncompliance. As of July 2026, 48 states in the United States have enacted at least one deepfake-related law, according to Ballotpedia’s tracker. Yet none of these frameworks is really built for enterprise fraud. They target content moderation, disclosure, and non-consensual media. None directly addresses the authorization workflows attackers actually exploit. A company that is fully compliant with deepfake laws would still be exposed by the Arup scenario.
Regulators such as the Federal Trade Commission (FTC) have signaled that using AI to deceive is prosecutable under existing fraud statutes, but enforcement is reactive and case-by-case. Executives who treat fraud as just a criminal act rather than a governance failure arising from inadequate technical oversight face severe personal and corporate liability.
Strategic Challenges and Recommended Actions
Defending against AI-powered fraud requires rethinking how security spending is justified. Traditional ROI models rely on historical loss avoidance, but in the age of generative fraud, past losses are an unreliable predictor of future exposure.
The primary implementation challenge is friction versus security. Deploying stronger authentication and behavior monitoring across corporate touchpoints creates friction that employees and vendors resist. In addition, integrating AI defenses into legacy enterprise resource planning (ERP) systems creates technical debt. Organizations also struggle with data silos, even though fraud detection now requires real-time visibility across all departments.
To protect enterprise value, leadership teams should move from passive compliance to active resilience.
Verify out of band. Require a callback to a known number and dual approval for large or unusual transfers. Never authorize a payment on a voice or video request alone.
Strengthen authentication. Use multifactor cryptographic verification and zero-trust principles (verify every request, regardless of source). Treat biometrics with caution, since deepfakes can spoof them.
Red-team for AI fraud. Have ethical hackers use generative AI to stress test internal systems and give the risk committee ownership of the results.
Use AI to fight AI. Deploy monitoring tools that flag behavioral anomalies across internal communications, ledger entries, and vendor registries in real time.
Establish cross-functional fraud task forces. Break down departmental silos and treat fraud detection as an integrated business process.
Future Outlook
As AI advances, the convergence of generative AI and autonomous software agents suggest that corporate fraud may increasingly be automated, including by self-directed AI agents operating as fraud syndicates. Business leaders must recognize that the future of corporate defense relies not on human vigilance alone, but on building resilient, self-healing digital ecosystems where trust is algorithmically verified and continuously audited.
Alan F Burke CPA
AI-Powered Corporate Fraud: What Business Leaders Need to Know
October 1, 2026 · Blog, What's New in Technology
⏱ 4 min read
For years, corporate fraud was limited by the costs, expertise, and resources required to carry out a convincing deception. Artificial intelligence (AI) has changed this.
Today, AI can create realistic voices, videos, emails, invoices, identities, and customer interactions at a scale and speed that traditional fraud controls were never designed to address. AI-powered fraud is a governance, financial, and strategic risk – not just an IT problem.
The Evolution of Corporate Fraud
Fraud is no longer limited to static phishing emails. Threat actors, from organized criminal syndicates to rogue insiders, use large language models and advanced machine learning to execute complex, multilayered fraud schemes.
One of the most cited reference cases is the 2024 Arup incident. A finance employee at the engineering firm’s Hong Kong office was tricked into transferring about $25 million across multiple transactions after joining a video conference call with deepfake replicas of the company’s CFO and other colleagues. The fraud succeeded because it targeted the human authorization step, the exact step where financial controls assume identity can be trusted on sight and sound.
Beyond deepfake executives, new trends include synthetic vendor creation, where generative models fabricate entire corporate entities. Each comes complete with tax IDs, websites, regulatory filings, and executive profiles. They are used to infiltrate accounts payable systems. Bad actors also use machine learning to reverse-engineer enterprise anti-fraud algorithms, find blind spots, and execute micro-transactions that stay beneath detection thresholds.
Why the Numbers Should Worry Boards, Not Just Security Teams
The 2026 INTERPOL Global Financial Fraud Threat Assessment flagged AI-powered fraud as one of organized crime’s primary growth sectors. It reports that fraud alerts have risen 54 percent since 2024, with more than 1,500 cross-border cases involving $1.1 billion in lost assets.
The Regulatory Gap Executives Should Worry About
Regulation is accelerating, but it is not solving the fraud problem. The EU AI Act’s transparency provisions took effect Aug. 2. It requires the disclosure of AI-generated content, with penalties for noncompliance. As of July 2026, 48 states in the United States have enacted at least one deepfake-related law, according to Ballotpedia’s tracker. Yet none of these frameworks is really built for enterprise fraud. They target content moderation, disclosure, and non-consensual media. None directly addresses the authorization workflows attackers actually exploit. A company that is fully compliant with deepfake laws would still be exposed by the Arup scenario.
Regulators such as the Federal Trade Commission (FTC) have signaled that using AI to deceive is prosecutable under existing fraud statutes, but enforcement is reactive and case-by-case. Executives who treat fraud as just a criminal act rather than a governance failure arising from inadequate technical oversight face severe personal and corporate liability.
Strategic Challenges and Recommended Actions
Defending against AI-powered fraud requires rethinking how security spending is justified. Traditional ROI models rely on historical loss avoidance, but in the age of generative fraud, past losses are an unreliable predictor of future exposure.
The primary implementation challenge is friction versus security. Deploying stronger authentication and behavior monitoring across corporate touchpoints creates friction that employees and vendors resist. In addition, integrating AI defenses into legacy enterprise resource planning (ERP) systems creates technical debt. Organizations also struggle with data silos, even though fraud detection now requires real-time visibility across all departments.
To protect enterprise value, leadership teams should move from passive compliance to active resilience.
Verify out of band. Require a callback to a known number and dual approval for large or unusual transfers. Never authorize a payment on a voice or video request alone.
Strengthen authentication. Use multifactor cryptographic verification and zero-trust principles (verify every request, regardless of source). Treat biometrics with caution, since deepfakes can spoof them.
Red-team for AI fraud. Have ethical hackers use generative AI to stress test internal systems and give the risk committee ownership of the results.
Use AI to fight AI. Deploy monitoring tools that flag behavioral anomalies across internal communications, ledger entries, and vendor registries in real time.
Establish cross-functional fraud task forces. Break down departmental silos and treat fraud detection as an integrated business process.
Future Outlook
As AI advances, the convergence of generative AI and autonomous software agents suggest that corporate fraud may increasingly be automated, including by self-directed AI agents operating as fraud syndicates. Business leaders must recognize that the future of corporate defense relies not on human vigilance alone, but on building resilient, self-healing digital ecosystems where trust is algorithmically verified and continuously audited.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
With the global bond market size bigger than many of the world’s biggest economies, it’s important for businesses that sell bonds to understand how to report transactions properly. According to the International Capital Market Association (ICMA), the global bond market’s capitalization is more than $128 trillion.
Continuing Appropriations and Extensions Act, 2027 (HR 6500) – This appropriations bill was finalized and passed by both the House and the Senate on Sept. 1. The act funds the fiscal year 2027 government budget through Dec. 11 at current levels. It was signed by the President on Sept. 2.
For years, corporate fraud was limited by the costs, expertise, and resources required to carry out a convincing deception. Artificial intelligence (AI) has changed this.