1. FRAUD EXAMINATION ALBRECHT, ALBRECHT, & ALBRECHT Liability, Asset & Inadequate Disclosure Frauds Chapter 13

2. Learning Objectives 1.Identify fraudulent schemes that understate liabilities. 2.Understand the understatement of liabilities fraud. 3.Identify fraudulent schemes that overstate assets. 4.Understand the overstatement of assets fraud.

3. Learning Objectives 5.Identify fraudulent schemes that inadequately disclose financial statement information. 6.Understand the inadequate disclosure fraud.

4. What Makes It Hard for Auditors to Detect Fraud?

5. How is Liability and Revenue Fraud Committed?

6. How is Liability Fraud Committed?

7. Discuss Ways Liability Fraud is Committed.

8. What are Accrued Liabilities?

9. How Are Unearned Revenues Abused? EXPLAIN

10. Define a Contingent Liability. How are they abused?

11. What Are Some Analytical Symptoms of Liability Fraud?

12. What Symptoms Appear in Documents?

13. What Are Some Other Clues to Liabilities Fraud?

14. Complete The Chart. Liability Relationships Liability Account Balances With Real-World Number With Industry Competitors Analysis of Period-to-Period Changes Analysis of Period-to-Period Changes

15. What is a Recommended Process for Examining for Liabilities Fraud?

16. List Ratios that Are Used to Detect These Types of Fraud.

17. List Ratios that Are Used to Detect These Types of Fraud. (cont’d)

18. Define Improper Capitalization or Expensing.

19. List Five Common Ways to Overstate Assets.

20. List Some Ways Fixed Assets Are Overstated.

21. What Does Publicly Traded Mean?

22. List Some Symptoms of Asset Fraud.

23. Discuss & Define Inadequate Disclosure Fraud.

24. How Are Footnotes Made Misleading?

25. Terms Match Purchase something, one company by another Long-term loan secured by real property Stocks, bonds and other non-cash assets Rent asset, do not own, make periodic payments Mortgage Acquisition Lease Merger Marketable Securities Combining two businesses into one business

26. Terms Match Asset that is not tangible, can’t touch Retirement benefits paid to former employees Property, Plant & Equipment Capitalized expenditure to be expensed in future Deferred Asset Fixed Asset Pension Intangible Asset Capitalization Recording expenditure as an asset

27. Terms Match Assets are recorded at higher values than they should be Agreement to buy back something already sold Liabilities are understated Issuing financial statements with inadequate disclosure Liability Frauds Disclosure Frauds Repurchase Agreement Asset Frauds