How Accountants Cooked the Books
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Más de Iyad Mourtada, CMA, CIA, CFE, CCSA, CRMA, CPLP
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How Accountants Cooked the Books
- 2. No More Street Crimes
- 4. Occupational Frauds by Category — Frequency How Occupational Fraud is Committed
- 5. Occupational Frauds by Category — Median Loss How Occupational Fraud is Committed
- 6. Initial Detection of Occupational Frauds
- 8. Frequency of Anti-Fraud Controls8 Victim Organizations
- 9. Position of Perpetrator — Frequency Perpetrators
- 10. Position of Perpetrator — Median Loss Perpetrators
- 11. Position of Perpetrator in Asia — 196 Cases Perpetrators
- 12. Age of Perpetrator — Frequency Perpetrators
- 13. Age of Perpetrator — Median Loss Perpetrators
- 14. Department of Perpetrator — Frequency Perpetrators
- 15. Behavioral Red Flags of Perpetrators Perpetrators
- 16. Income Statement
- 17. Profit is an Estimate
- 18. Cooking the Financial Books Assumptions (What ingredients to include) Estimates (How much to include) You may assume that they’re accurate down to the last dollar. Not true! The balance in the cash account is exact, but virtually every other number you see in a financial report is based on an estimate.
- 20. Round Trip Recipe Pre-Paid Services 4 Million Compa Vender ny Current Revenue 1 Million Reporting more revenue
- 21. Deferral of Revenue Recipe Custo mer 1 Millio n 2 Million Balance Sheet Umearned Revenue Current Revenue Manipulating revenue
- 22. - Sold equipment on four-year leases, including service and maintenance. - Booked all the revenues up front. - Xerox mis-stated four years' worth of profits, resulting in an overstatement of close to $6bn.
- 23. Channel Stuffing Company inflates sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large.
- 25. Capitalize Expenses Recipe Expen ses 8 Million 8M illio n Balance Sheet Capital Income Satement Expenses
- 26. - Grow rapidly by buying other garbage companies. But didn't know to run them. - Changed the depreciation of their 20,000 tracks from 8-10 years to 12-15 years and did the same for their 1.5 million dumpsters - Took a pretax charge -a onetime write off- of 3.54 billion against its earnings
- 27. Underreporting ‘line costs’ (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them. In June 2002, the company admitted it had inflated its profits by $3.8bn between January 2001 and March 2002. By the end of 2003, it was estimated that the company's total assets had been inflated by around $11 billion
- 28. Are the accountants making the right judgment decisions? Questions: Who controls your organization?
- 31. Balance Sheet
Notas del editor
- *“Other” category was not included in the 2010 Report.
- *“Formal Fraud Risk Assessments” category was not included in the 2010 Report. Note: The percentages for frequency of anti-fraud controls reflected in 2010 Report contained a computational inaccuracy. The percentages included in this chart have been corrected. 8The following key applies to the charts on slides 125-128: • External Audit of F/S = Independent external audits of the organization’s financial statements • Internal Audit / FE Department = Internal audit department or fraud examination department • External Audit of ICOFR = Independent audits of the organization’s internal controls over financial reporting • Management Certification of F/S = Management certification of the organization’s financial statements
- *“Other” category was not included in the prior years’ Reports.
- *“Other” category was not included in the prior years’ Reports.
- *“Other” category was not included in the 2010 Report.
- Note: The percentages for behavioral red flags displayed by perpetrators in the 2010 Report contained a computational inaccuracy. The percentages included in this chart have been corrected.
- This is not real profit
- Many managers think that income statement shows how much the cash the company earned during the period How much they spend and how much left over. And the left over amount will be the profit / No Income statement focuses on revenue and expenses and profit Accural Accounting method
- When you make decisions you should look at the Assumptions What are they (what to include and what not to include) – estimates how they are implemented – Bias of the implemeation– implications of the implemattion