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Management Fraud (Financial Statement Fraud (Nature of financial statement…
Management Fraud
Financial Statement Fraud
Nature of financial statement fraud
Involves intentional deceit
Involves attempted concealment
Rarely seen
Many false red flag
Conviction is difficult
Financial statement fraud exposure
Ways to detect
Financial statement analysis
Non financial performance measures
Motivation for Financial Statement Fraud
To increase stock price
Encourage Investment through the sale of stock
To meet company expectation
To receive performance related bonuses
Revenue and Inventory Fraud
Revenue-Related Fraud
Symptoms
Accounting or Documentary
Control
Analytical
Behavioral & verbal
Lifestyle
Tips & complaints
Exposure
related-party transactions
sham sales
bil-and-hold sales
side agreements
consignment sales
channel stuffing
lapping @ kitting
redating @ refreshing transactions
liberal return policies
partial shipment
improper cutoff
round-tripping
Inventory and COGS Frauds
The Symptoms of Fraud
Accounting or Documentary Symptoms
Control Symptoms
Analytical Symptoms
Behavioral Symptoms
Fraud Exposure
Liability,Assets and Inadequate Disclosure Fraud
Overstatement of asset fraud
Type of asset overstatements
Ways to detect overstatement
Inadequate disclosure fraud
disclosure fraud schemes
Ways to identify disclosure fraud
Understatement of liabilities fraud
Ways to detect
Documentary symptoms
Abnormal analytical symptoms