Investigating Financial Statement fraud Becker Fischer (BF) is a medium-sized construction company operating out of the eastern suburbs of Melbourne. BF operates out of a single building of about 500,000 square feet and has recently secured a government contract to build and maintain local council infrastructure. BF accounts for these and other similar projects, using the percentage completion method. They have other work they bill using the completed contracts method. A recent tip-off to the council suggests that Becker Fischer may be engaging in fraudulent financial reporting, so the council have engaged your expert forensic accounting services to investigate on their behalf. T

he following financial information is provided: 

Required: 

a. Perform horizontal analysis on the data in the table above, and identify five accounts that you consider to be particularly questionable. Show all workings. 

b. For each of the five accounts you identified in part 'a', explain with discussion what five different fraud schemes could be happening that would explain the result.

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2017 2018 2019 Current Assets 1,100,000 1,350,000 1,450,000 276,000 165,000 Cash 401,000 138,000 Accounts Receivable 302,000 Prepaid Expenses 152,000 Inventory 659,000 670,000 664,000 Non-Current Assets Motor Vehicles (net) Equipment (net) 330,000 261,000 281,000 824,000 841,000 834,000 Buildings 1,648,000 1,621,000 1,593,000 Current Liabilities Accounts Payable Accrued Expenses 769,000 763,000 697,000 121,000 123,000 109,000 Unearned Revenue 55,000 49,000 22,000 Non-Current Liabilities Loan 879,000 866,012 1,182,000 Sales: "Percentage of completion' method 2,000,000 2,033,500 2,637,500 1,934,250 1,956,500 2,159,500 1,200,500 1,150,000 950,600 2,198,000 2,241,000 1,972,700 "Completed contracts' method Construction Costs Other Costs (selling, admin etc.) 2017 2018 2019 Current Assets 1,100,000 1,350,000 1,450,000 276,000 165,000 Cash 401,000 138,000 Accounts Receivable 302,000 Prepaid Expenses 152,000 Inventory 659,000 670,000 664,000 Non-Current Assets Motor Vehicles (net) Equipment (net) 330,000 261,000 281,000 824,000 841,000 834,000 Buildings 1,648,000 1,621,000 1,593,000 Current Liabilities Accounts Payable Accrued Expenses 769,000 763,000 697,000 121,000 123,000 109,000 Unearned Revenue 55,000 49,000 22,000 Non-Current Liabilities Loan 879,000 866,012 1,182,000 Sales: "Percentage of completion' method 2,000,000 2,033,500 2,637,500 1,934,250 1,956,500 2,159,500 1,200,500 1,150,000 950,600 2,198,000 2,241,000 1,972,700 "Completed contracts' method Construction Costs Other Costs (selling, admin etc.)

Answer rating: 100% (QA)

a Perform horizontal analysis on the data in the table above and iden... View the full answer