Detecting Accounting Fraud Before It's Too Late
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More About This Title Detecting Accounting Fraud Before It's Too Late

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Detect accounting fraud before it’s too late

Accounting fraud is the deliberate manipulation of accounting records in order to make a company's financial performance seem better or worse than it actually is. Accounting scandals often have catastrophic consequences for shareholders and employees. Thus, analysts and auditors must be equipped to detect accounting fraud.

This book is a comprehensive guide to detecting accounting fraud for auditors investigating accounting fraud and analysts/managers seeking to prevent it. A wide variety of warning signs are described, as are several techniques for detecting and addressing fraud.

  • Understand the motivations and warning signs behind accounting fraud
  • Get to know how accounting fraud is done and how to detect it
  • Avoid the losses that often come from accounting fraud
  • Benefit from case studies throughout to that help illustrate the author's points

It’s unfortunate that managers, auditors, and analysts must be wary of accounting fraud—but this book equips you with the know-how to detect it before it’s too late.

English

Oriol Amat (Barcelona, Spain) is a Professor of Financial Economics and Accounting at Universitat Pompeu Fabra in Barcelona. He is also the Director of the Masters program in Accounting and Finance. In addition, Amat is President of the Catalan Accounting Association (ACCID) and was previously a Member of the Catalan Parliament and a Board member of the National Commission of the Stock Exchange.

English

Prologue

Introduction

1. Fraud and Accounting Manipulations

1.1. Fraud and Its Effects

1.2. Modifying Companies’ Financial Information

1.3. Calling Things by Their Name: From Creative Accounting to Big Baths

2. Accounting Fraud: An Ancient Practice 

2.1. The First Accounting Frauds

2.2. Accounting Frauds Continue with the Double Entry

2.3. The Crash of 1929 and the Obligation to Audit Accounts

2.4. Reinforcement of the Business Law and Auditing After the String of Scandals of 2000

2.5. In 2008, After the Burst of the Housing and Financial Bubble, History Repeats Itself

3. Problems in the Regulation of Financial Information

3.1. How Financial Information Is Generated

3.2. Audit of Accounts: Essential, but Not Infallible

3.3. Analysts and Rating Agencies

3.4. Regulators and the Limitations of Accounting Regulations

3.5. Role of the Media

4. Why Are Accounts Manipulated?

4.1. Motivation, Opportunity, and Rationalization

4.2. The Door to Fraud

5. Legal Accounting Manipulations

5.1. Alternatives, Estimations, and Legal Gaps

5.2. Main Legal Manipulations

5.3. Impact of Legal Manipulations in the Accounts

6. Illegal Accounting Manipulations

6.1. Accounting Crime

6.2. How Are Illegal Manipulations Done?

6.3. Operations Through Tax Havens

6.4. Main Illegal Manipulations

6.5. Main Items Affected by Accounting Fraud

7. Ethical Considerations and Economic Consequences of Manipulations

7.1. Ethical Dimension of Accounting Fraud

7.2. Economic Consequences of Accounting Fraud

7.3. Consequences to Managers and Companies That Manipulate Accounts

7.4. What to Do When a Company Deteriorates

8. Personal Warning Signs

8.1. Moments the Warning Signs Occur

8.2. Warning Signs Before Fraud Occurs

8.3. Warning Signs After Fraud Occurs

8.4. Language of Fraudsters

8.5. Successful Businessmen Who End Up in Jail

9. Organizational Warning Signs and Nonfinancial Indicators

9.1. Warning Signs Before Fraud Occurs

9.2. Warning Signs After Fraud Occurs

9.3. Warning Signs Based on Nonfinancial Indicators

10. Warning Signs in the Accounts

10.1. Audit of Accounts

10.2. Balance Sheet

10.3. Income Statement

10.4. Cash Flow Statement

10.5. Statement of Changes in Equity

10.6. Notes

10.7. Ratios That Anticipate Frauds

10.8. Variations in Accounts That Warn of Frauds Already Produced

10.9. Ratios That Warn of Frauds Already Produced

10.10. Synthetic Index to Detect Manipulating Companies

11. Some Suggestions to Improve the Current Situation

11.1. Reinforce Values and Institute Ethical Codes

11.2. Improve Control Systems in Organizations

11.3. Improve Regulation

11.4. Reinforce Supervision

11.5. Reinforce the Sanctioning Regime

11.6. The Challenge of Providing Relevant Information for Decision-Making

Epilogue

Appendix 1. Criminal Responsibility of Legal Entities and Normative Compliance 

Appendix 2. Audit Program for the Identification of Fraud Risks

List of Companies Mentioned in the Book

Index

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