1 / 14

Today’s Topics

Today’s Topics. Revenue Frauds Inventory Frauds Liability Frauds Other Asset Frauds Disclosure Frauds. The 7 Shenanigans-Revisited. Premature recording of revenue Bogus revenue One time “recurring” gains Shifting current expenses Unrecorded liabilities Revenue shifting

jamese
Download Presentation

Today’s Topics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Today’s Topics • Revenue Frauds • Inventory Frauds • Liability Frauds • Other Asset Frauds • Disclosure Frauds FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-1

  2. The 7 Shenanigans-Revisited • Premature recording of revenue • Bogus revenue • One time “recurring” gains • Shifting current expenses • Unrecorded liabilities • Revenue shifting • Shifting future expenses FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-2

  3. General Detection Model • Period to period account balance analysis • Period to period relationship analysis • Comparison with industry averages • Comparison with physical assets • General horizontal and vertical analysis FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-3

  4. Revenue Frauds • Shenanigans #1 and #2 • Table pps. 408-409 • Revenue cycle • Sell goods or services • Estimate collectibility • Returns • Write-offs • Collect cash FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-4

  5. Revenue Fraud Detection • Detection • Accounting anomilies • Ratios (p.410) FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-5

  6. Inventory Frauds • Shenanigan #4 • Table p. 420 • Inventory cycle • Purchase inventory • Returns • Payment • Sell inventory • Write offs • Estimate or count inventory • Value inventory FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-6

  7. Inventory Fraud Detection • Detection • Statement of cash flows • Comparison with physical assets • Ratios (p.421) FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-7

  8. Liability Fraud • Shenanigan #5 • Table p. 442 • Liability cycle • Purchase goods and services • Incur accruals • Sell goods and services • Borrow money • Payments on account • Assess contingencies FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-8

  9. Liability Fraud Detection • Types • Understatement • Unearned revenue • Omission of debt and contingencies • Detection • Accounting anomilies • Ratios (p.449) FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-9

  10. Other Asset Fraud • Shenanigan #4 • Types • Overstatement • Improper capitalization • Understated write offs FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-10

  11. Other Asset Fraud Detection • Detection • Accounting anomilies • Ratios (p.458; p.463) FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-11

  12. Inadequate Disclosure Fraud • Misrepresentation • Company and its products • Via financial reports • Via footnote disclosures FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-12

  13. Disclosure Fraud Detection • Detection • KTT • Questions on p.468 • Use common sense • Compare footnotes • Vigorous use of inquiries • Go outside the box! • Fraud Buster Ratio • (NI - CFO)/Total Assets; should approach zero • Condition worsens as result grows FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-13

  14. Financial Fraud Detection • KTT is the key • Use the Fraud Exposure Rectangle • Management & Directors • Background, motivation & influence • Company relationships • Obligations, related party transactions & compliance • Nature of organization & industry • Financial results & operations • GAAP, attitude FORENSIC ACCOUNTING - BA124 – Fall 2008 Slide 11-14

More Related