Financial Shenanigans, Fourth Edition: How to Detect Accounting Gimmicks and Fraud in Financial Reports

The bestselling classic from the “Sherlock Holmes of Accounting”—updated to reflect the key case studies and most important lessons from the past quarter century.
This fourth edition of the classic guide shines a light on the most shocking frauds and financial reporting offenders of the last twenty-five years, and gives investors the tools they need to detect:
•Corporate cultures that incentivize dishonest practices•The latest tricks companies use to exaggerate revenue and earnings•Techniques devised by management to manipulate cash flow as easily as earnings•Companies that use misleading metrics to fool investors about their financial performance•How companies use acquisitions to hide deterioration in their underlying business
This new edition focuses on the key case studies and most important lessons from the past quarter century, and brings you up to date on accounting chicanery in the global markets. Howard Schilit and his team of renowned forensic accounting experts expose financial reporting miscreants and unveil the latest methods companies use to mislead investors. You’ll learn everything you need to know to unearth deceptive reporting and avoid costly mistakes.




Table of Contents:
Preface: Reflections on My Last 25 Years

Part One: Establishing the Foundation


Chapter 1: 25 Years of Shenanigans


Chapter 2: Just Touch Up the X-Rays


Part Two: Earnings Manipulation Shenanigans


Chapter 3: Earnings Manipulation Shenanigan No. 1: Recording Revenue Too Soon


Chapter 4: Earnings Manipulation Shenanigan No. 2: Recording Bogus Revenue


Chapter 5: Earnings Manipulation Shenanigan No. 3: Boosting Income with One-Time or Unsustainable Activities


Chapter 6: Earnings Manipulation Shenanigan No. 4: Shifting Current Expenses to a Later Period


Chapter 7: Earnings Manipulation Shenanigan No. 5: Employing Other Techniques to Hide Expenses or Losses


Chapter 8: Earnings Manipulation Shenanigan No. 6: Shifting Current Income to a Later Period


Chapter 9: Earnings Manipulation Shenanigan No. 7: Shifting Future Expenses to the Current Period


Part Three: Cash Flow Shenanigans


Chapter 10: Cash Flow Shenanigan No. 1: Shifting Financing Cash Inflows to the Operating Section


Chapter 11: Cash Flow Shenanigan No. 2: Moving Operating Cash Outflows to Other Sections


Chapter 12: Cash Flow Shenanigan No. 3: Boosting Operating Cash Flow Using Unsustainable Activities


Part Four: Key Metrics Shenanigans


Chapter 13: Key Metric Shenanigan No. 1: Showcasing Misleading Metrics that Overstate Performance


Chapter 14: Key Metric Shenanigan No. 2: Distorting Balance Sheet Metrics to Avoid Showing Deterioration


Part Five: Acquisition Accounting Shenanigans


Chapter 15: Acquisition Accounting Shenanigan No. 1: Artificially Boosting Revenue and Earnings


Chapter 16: Acquisition Accounting Shenanigan No. 2: Inflating Reported Cash Flow


Chapter 17: Acquisition Accounting Shenanigan No. 3: Manipulating Key Metrics


Part Six: Putting it all Together


Chapter 18: The Unraveling


Chapter 19: The Forensic Mindset


Index


Acknowledgments




About the Author :
Dr. Howard Schilit is a pioneer in the field of detecting accounting tricks in corporate financial reports that mislead investors. He is the author of Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, now in its 3rd Edition. Howard was the founder and CEO of CFRA, a global forensic accounting research organization. He has been a leading spokesman before the US Congress, the SEC, and global media outlets about the causes and early warning signs of accounting tricks in public filings. Dr. Schilit began his career as an Associate Professor of Accounting at American University and continues to teach and lecture all over the world. Dr. Schilit holds his doctorate in Accounting from the University of Maryland. Jeremy Perler, CFA, CPA, is the Director of Research at Schilit Forensics and co-author of Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports (3rd edition, 2010). Previously, Jeremy served as the in-house Forensic Accounting Analyst for Coatue Management, a long/short equity hedge fund; Director of Research for CFRA; and auditor for PricewaterhouseCoopers. In addition, Mr. Perler serves on the FASB's Financial Accounting Standards Advisory Council (FASAC) as a representative of the Investor Community. Jeremy holds a Master of Accounting and a BBA from the University of Michigan Ross School of Business.