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Financial Reporting and the Board of Directors PowerPoint PPT Presentation

Financial Reporting and the Board of Directors Michael R. Young Willkie Farr & Gallagher Three Topics The Origin of Financial Fraud Failures of Detection The Role of the Audit Committee The Origin of Financial Fraud Accounting Irregularities (1) Aggressive Financial Target

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Financial Reporting and the Board of Directors

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Financial reporting and the board of directors l.jpg

Financial Reportingand the Board of Directors

Michael R. Young

Willkie Farr & Gallagher


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Three Topics

  • The Origin of Financial Fraud

  • Failures of Detection

  • The Role of the Audit Committee


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The Origin of Financial Fraud


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Accounting Irregularities

(1) Aggressive Financial Target

(2) Failure Unforgivable


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Accounting Irregularities

(1) Aggressive Financial Target

(2) Failure Unforgivable


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  • Shipment Acceleration


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  • Shipment Acceleration

  • Reserve Reduction


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  • Shipment Acceleration

  • Reserve Reduction


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  • Shipment Acceleration

  • Reserve Reduction

  • Bad Accounts Receivable


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  • Shipment Acceleration

  • Reserve Reduction

  • Bad Accounts Receivable

  • Expense Recognition Delay


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  • Shipment Acceleration

  • Reserve Reduction

  • Bad Accounts Receivable

  • Expense Recognition Delay

  • Intercompany Credits


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  • Acquisition Reserve Adjustments


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  • Acquisition Reserve Adjustments

  • Inventory “In Transit”


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  • Acquisition Reserve Adjustments

  • Inventory “In Transit”

  • Phantom Inventory


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  • Acquisition Reserve Adjustments

  • Inventory “In Transit”

  • Phantom Inventory

  • Phony Shipments


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  • Acquisition Reserve Adjustments

  • Inventory “In Transit”

  • Phantom Inventory

  • Phony Shipments

  • General Ledger Revisions


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FailuresofDetection


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Failure of Detection:

The Outside Auditor


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Failure of Detection:

Internal Audit


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Failure of Detection:

The Audit Committee


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The Roleof the Audit Committee


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The New Rules

  • Power & Authority

  • Independence

  • Financial Sophistication

  • Diligence


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A Practical Approach

  • The “Tone at the Top”

  • Logistical Capability

  • Detection of Misreporting


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Financial Reportingand the Board of Directors

Michael R. Young

Willkie Farr & Gallagher


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