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Accounting & Auditing

Accounting & Auditing

Accountants and auditors are responsible for detecting and deterring fraud by evaluating accounting systems for weaknesses, designing and monitoring internal controls, determining the degree of organizational fraud risk, interpreting financial data for unusual trends and following up on fraud indicators. 

Articles and Other Resources

Accounting Malpractice and the Auditor's Responsibility to Detect Fraud

In the case of Livent, Inc. v. Deloitte & Touche the Ontario Court of Appeal upheld a 2014 decision ordering Deloitte & Touche (Deloitte) pay $118 million in damages to a theater company (Livent, Inc.) for which Deloitte performed auditing services. Why was Deloitte held accountable for such a large sum?

Why Audits Fail

A bond of trust joins auditors with all who depend on the accuracy and completeness of their findings. But venal executives, captured regulators and compromised auditors can subvert that bond, betray confidence and dissipate capital. This article offers key insights and best practices to help CFEs — including those who are auditors — expose and mitigate threats to audit reliability.

Do Numbers Lie?: Cooking the Books or Keeping Them on Simmer

Corporate management has significant latitude in choosing what numbers to report and when. But business pressures can cloud their judgment. This article examines how using accounting gimmicks and manipulating financial statements might satisfy investors but can cross into fraudulent territory.

Tax Preparers Gone Wild

Only four U.S. states — California, Oregon, Maryland and New York — regulate independent tax preparers. Many preparers are reputable CPAs, lawyers or IRS-certified "enrolled agents." But many just hang up their "We do taxes!" signs and are in business.

Inventory Inflation Schemes Come in Many Flavors

Revenue recognition schemes are the most common form of financial reporting fraud because companies sometimes take desperate measures to meet their revenue and earnings goals. But revenue recognition isn't the only avenue for artificially enhancing the appearance of financial health.

When Do Non-GAAP Metrics Become Fraudulent Publicity?

For years, companies reported their figures under GAAP or IFRS standards. But what happens when a company commingles the GAAP/IFRS-based financial information with other performance metrics in its reports and press releases? These extra measures have no standards, and no one audits them — perfect conditions for fraud.

Numbers Manipulator Describes Enron's Descent

Nearly 15 years ago the actions of Enron's C-suite executives led to the company's demise. In this interview with Andrew Fastow, former Enron CFO, read how the toxic corporate culture and his rationalizations behind "finding the loopholes" led to one of the largest and most well-known cases of corporate fraud and corruption.

Won't Get Fooled Again, But They'll Try

With a nod to Pete Townshend and The Who, many auditors have expressed their determination to not get fooled again after being deceived by creative fraudsters. Gerry Zack, CFE, CPA, will use two recent cases to illustrate the lengths that crooks will go to trick auditors into issuing clean opinions on fraudulent financial statements.

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