Question

In The Accounting Wars, author Mark Stevens presents a chapter on “Book Cooking, Number Juggling, and Other Tricks of the Trade.” He quotes Glen Perry, a former chief accountant of the SEC’s Enforcement Division: “Companies play games with their financial reports for any number of reasons, the most common being the intense pressure on corporate management to produce an unbroken stream of increasing earnings reports.” Stevens then lists Perry’s “terrible 10 of accounting frauds—ploys used to misrepresent corporate financial statements.”
Among the ten are the following:
1. Recognition of revenues before they are realized
2. Recognition of rentals to customers as sales
3. Improper cutoffs at year-end
4. Creation of fraudulent year-end transactions to boost earnings
5. Failure to recognize losses through write-offs and allowances
6. Inconsistent accounting practices without disclosures
7. Capitalization or improper deferral of expenses
Suppose you were a division manager in a major corporation. Give a brief, specific example of each of the 7 methods.



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  • CreatedFebruary 20, 2015
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