Tags :Inventory Fraud

In the high-stakes world of public markets, financial statements are both a compass and a camouflage. While regulators like the SEC have tightened scrutiny post-Enron, creative accounting persists—now with subtler tricks. From inflated cash balances to phantom inventory, here’s how to detect financial shenanganas in US-listed companies, armed with real case studies and forensic accounting techniques. 1. The Cash Conundrum: When “Liquid Assets” Aren’t Liquid Warning Signs: Forensic Tools: 2. Accounts Receivable: The Art of Fictional Sales Telltale Patterns: Case Study:Valient Pharma booked $150M in AR from “Bahamas-based clients”—later exposed as shell companies. 3. Inventory: Where Profits Go to Hide Red Flags: Detection Tactics: 4. Capex Mirage: The “Build It and They Won’t Come” Strategy Warning Signs: Spotting Phantom Assets: 5....

Like(0)SinoLoanExpert2025-04-07Finance 101 accounts receivable fraudcash flow manipulationCFO warning signsdetecting accounting fraudearnings managementfinancial statement fraudforensic accounting techniquesGAAP loopholesInventory FraudSEC red flagsViews()

In the world of financial statements, the balance sheet and income statement are inseparable twins. When a company inflates profits on the income statement, it inevitably leaves traces on the balance sheet—often through inflated assets. Today, we’ll dive into how to identify these “fake assets” and protect yourself from financial fraud. 1. Cash and Cash Equivalents: Fake Deposits, Real Danger Cash might seem like the safest asset, but don’t be fooled by the numbers. Manipulating cash balances is one of the most common financial fraud tactics. Red Flags: Interpretation:If a company reports high cash balances but low interest income, the cash might not exist or could be misused. Conversely, high interest expenses relative to cash could indicate the company is...

Like(0)SinoLoanExpert2025-03-26Banking Advisors Accounts ReceivableBalance Sheet FraudDetecting Financial FraudFake AssetsFinancial Red FlagsFinancial Statement AnalysisFixed Asset FraudGoodwill FraudInventory FraudInvestment RiskViews()