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Financial Statement Fraud - Coggle Diagram
Financial Statement Fraud
Financial Reporting Fraud: Who, Why, and How
The Reasons
To preserve personal status/control
To maintain personal income/wealth flowing from salary, bonus, stock,
and stock options
To conceal true business performance
People Who Commit
Mid- and lower-level employees
Organized criminals
Senior Management
How Do People Commit
Beating the accounting system
Going outside the accounting system
Playing the accounting system
Accounting Principle and Fraud
Conceptual Framework
Recognition and Measurement Concepts
Principles
Revenue recognition
Matching
Full disclosure
Historical cost
Constraints
Materiality
Industry practice
Conservatism
Cost–benefit
Assumptions
Going concern
Monetary unit
Economic entity
Periodicity
Qualitative Characteristics
Relevance and Reliability
Comparability and Consistency
RESPONSIBILITY FOR FINANCIAL STATEMENTS
USERS OF FINANCIAL STATEMENTS
Types of Fraudulent
improper asset valuations
improper disclosures
fictitious revenues
timing differences
concealed liabilities and expenses
Fraudulent Financial Statement Schemes
Definition
Type of Fraud
Improper Disclosures
Timing Differences
Cost of Financial Statement Fraud
Fictitious Revenue
Concealed Liabilities and Expenses
Improper Asset Valuation
Detection of Fraudulent Financial Statement Schemes
Definition of Financial Statement Analysis
Types of Analysis
Percentage Analysis
Vertical Analysis
Horizontal Analysis
Ratio Analysis
Current Ratio
Quick Ratio
Receivable Turnover
Collection Ratio
Inventory Turnover
Average of Numbers is in Stock
Debt to Equity
Assets to Equity
Gross Margin
Profit Margin
ROA
ROE
Analysis of Cash Flows
Analysis of Nonfinancial Numbers
Deterrence of Financial Statement Fraud
Principles of The Fraud Triangle
Reduce the opportunity to commit financial statement fraud
Reduce grounds for rationalizing financial statement fraud
Reduce pressures to commit financial statement fraud