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FRAUD EXAMINATION ALBRECHT, ALBRECHT, & ALBRECHT. Financial Statement Fraud. CHAPTER 11. Learning Objectives. Understand the role that financial statements play in U.S. businesses. Describe the nature of financial statement fraud. Become familiar with financial statement fraud statistics

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Fraud examination albrecht albrecht albrecht

FRAUD EXAMINATIONALBRECHT, ALBRECHT, & ALBRECHT

Financial Statement Fraud

CHAPTER 11


Learning objectives
Learning Objectives

  • Understand the role that financial statements play in U.S. businesses.

  • Describe the nature of financial statement fraud.

  • Become familiar with financial statement fraud statistics

  • See how financial statement frauds occur and are concealed.


Learning objectives1
Learning Objectives

  • Understand the framework for detecting financial statement fraud.

  • Identify financial statement fraud exposures.

  • Explain how information regarding a company’s management and directors, nature of organization, characteristics, relationship with others, and financial results can help assess the likelihood of financial statement fraud.






Financial statement fraud statistics
Financial Statement Fraud Statistics.

  • Infrequent

  • 300 over 10 years

  • Costly

  • Last 23.7 months

  • Mean $25 million

  • CEO in 72%, CFO, COO

  • Computer hardware/software

  • 78% of firms on NASDAQ


Financial statement fraud statistics1
Financial Statement Fraud Statistics.

  • Most had no audit committee

  • Most directors were insiders

  • Family relationships between directors

  • 56% audited by Big Eight or Big Six

  • 25% changed auditors during fraud

  • Significant number of class action suits

  • Many resignations-few served jail time




Complete the fraud exposure rectangle
Complete the Fraud Exposure Rectangle.

Fraud Exposure Rectangle

1

2

4

3








Define the acronyms
Define the Acronyms.

  • COSO is

  • SEC is

  • GAAP is


Match terms definitions
Match Terms & Definitions.

10-K

Quarterly report publicly traded companies file with SEC

Government Agency responsible for regulating stock trading & financial Statements of Public companies

10-Q

Annual report publicly traded companies file with SEC

AAER

Document released by SEC when a company commits financial statement fraud

SEC


Match terms definitions1
Match Terms & Definitions.

Financial Statement Fraud

It recommended changes in financial statements

Intentionally misstating financial statements

Financial Statements

Reports summarizing cash & profits of an organization

Treadway Commission