FORENSIC ACCOUNTING - BA124 – Spring 2010Slide 9-1 Today’s Topics n Why Studying Conversion is Important n Sources of Information n The Role of Net Worth Calculations n Miscellaneous Articles and Cases n Shenanigan #2

FORENSIC ACCOUNTING - BA124 – Spring 2010Slide 9-2 Role of Conversion Analysis n Helps determine the extent of the fraud n Serves as a facilitation for confession

FORENSIC ACCOUNTING - BA124 – Spring 2010Slide 9-3 Sources of Information (Study pages ) n Variety of sources n Federal government sources n State government sources n Local government sources n Financial institution records n Public databases n Internet sources Don’t try to memorize the details of these sources. Know how to use some of them.

FORENSIC ACCOUNTING - BA124 – Spring 2010Slide 9-4 Net Worth Method n For use in estimating “Funds from Unknown Sources” n Calculation: n Assets - Liabilities = Net Worth n NW c - NW P = Net Worth Increase n NWI + Living Expenses = Income n Income - Known Sources = Unknown Sources

FORENSIC ACCOUNTING - BA124 – Spring 2010Slide 9-5 Shenanigan #2- Recording Bogus Revenue n Technique #1: n Lack of economic substance n Technique #2: n Loans recorded as revenue n Technique #3: n Investment income as operating revenue n Technique #4: n Supplier rebates as future revenue n Technique #5: n Post merger deferred revenue