Accounting Irregularities in Financial Statements: A Definitive Guide for Litigators, Auditors, and Fraud Investigators
Accounting irregularities are at the heart of those kinds of frauds that hit financial statements and include misstatement, misclassification as well as misrepresentation. In essence, they involve manipulation of accounting data, description or disclosure in order to distort the true financial picture of the organization in question. This book provides an in-depth practical reference, designed for litigators, investigators, auditors, accountants and other professionals who need to understand and combat accounting irregularities and to uphold the integrity of financial statements. Regulators will find this book an essential source of ideas and references when considering reforms. Educators and students will see this book as an alternative, inspiring way of understanding accounting and how to stay alert for accounting irregularities. The first two chapters introduce the basics of accounting irregularities in the context of the financial reporting environments, and generally accepted accounting principles in the UK and Hong Kong. Perpetrators often seek ways to creating financial illusions in four common directions - selling more, costing less, owning more and owing less as discussed in Chapters 3 to 6. The seventh chapter considers various ways that perpetrators manipulate the classification and disclosure of financial statements. Chapter 8 explores three scenarios of accounting irregularities - tax evasion, theft and commercial dispute. The concluding chapter sets out the deterrents to accounting irregularities in two dimensions. At the micro-level, deterrents are implemented within the authority of the organization in question, whilst the macro-level deterrents refer to the external environment beyond the controls of any individual organization.
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Overview of Financial Reporting Environments
Basics of Accounting Irregularities
Tangible fixed assets
31 December accepted accounting principles accounting equation accounting irregularities accounting periods ending accounting periods starting accounting policies accruals amount appropriate audit auditors basis capital cash Chapter charged Companies Act 1985 Companies Ordinance compliance consider a relevant consolidated Contingent Liabilities contract corporate governance cost of sales customers debtors December depreciation directors disclosed disclosure documents double-entry book-keeping doubtful debts effective for accounting expenditure fair view fictitious financial reporting environment financial statements financial year-end fraud future economic benefits GAAP HKICPA in January Hong Kong incurred Intangible Assets issued internal control inventories invoices lease Let us consider Ltd's material million mis-statements off-balance-sheet financing overstated overstatement payment phantom sales provision for doubtful purchase quasi-subsidiary readers of financial receipt recognized refers related party sales revenue shareholders staff perpetrator subsidiary tangible fixed assets Theft Theft Act 1968 transactions true and fair Turnbull Report understated understatement valuation vendor