Question: A 2010 study on fraudulent financial reporting by COSO notes ways in which long-lived assets can be fraudulently overstated, including: Fictitious assets on the

A 2010 study on fraudulent financial reporting by COSO notes ways in which long-lived assets can be fraudulently overstated, including:

● Fictitious assets on the books (WorldCom)

● Improper and incomplete depreciation (Waste Management)

● Failure to record impairment of assets, especially goodwill (Sun Microsystems)

● Expired or worthless assets left on a company's books (Millacron)

● Assets overvalued upon acquisition, especially in the purchase of a company (WorldCom)

a. What might motivate management to overstate fixed assets?

b. What other factors should the auditor consider when assessing fraud risk related to long-lived assets?

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