Description

This course provides an overview of the various forms of financial fraud and manipulation that can distort financial statements and mislead stakeholders. It addresses tactics used by some companies to artificially inflate revenue, understate liabilities, mismanage assets, and misreport disclosures. By understanding these fraudulent practices, auditors can better identify these types of frauds and ensure more accurate and transparent financial reporting for stakeholders.

Chapter 1: Revenue and Earnings Manipulation – Overview

This chapter provides an overview of common methods of manipulating revenue and earnings, which can mislead stakeholders and distort financial statements. It covers inflating earnings through non-recurring items, overstating deferred revenue, backdating transactions, and using fraudulent journal entries.

Chapter 2: Expense and Liability Fraud – Overview

This chapter examines fraudulent activities that involve understating expenses and liabilities to create a false financial picture. Topics include misclassifying financial statement items, improper use of reserves, misrepresenting lease classifications, and structuring transactions to avoid regulatory thresholds.

Chapter 3: Asset and Equity Mismanagement – Overview

This chapter discusses fraud schemes that involve overstating assets and manipulating equity. This includes manipulating depreciation and amortization schedules, related party transaction fraud, creating shell companies, and manipulating stock option accounting.

Chapter 4: Disclosure and Reporting Fraud – Overview

This chapter addresses fraudulent practices in financial reporting, focusing on the misrepresentation or omission of critical information in disclosures. Key topics include failure to consolidate related entities, failure to disclose contingent liabilities, misreporting foreign currency transactions, and misleading disclosures, specifically the Management Discussion and Analysis (MD&A) section.