Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition

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  • Edition: 3rd
  • Format: Hardcover
  • Copyright: 2010-05-05
  • Publisher: McGraw-Hill Education
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With major financial scandals popping up in greater numbers—and with more inevitably on the way—it has never been more important for you to understand what dishonest companies do to trick investors. Since the early 1990s, Financial Shenanigans has been helping investors unearth deceptive financial reporting at the most critical time— before they suffer major losses.

Now, the third edition broadens its focus to include the newest, most sophisticated techniques companies use to mislead investors.

Referred to as the “Sherlock Holmes of Accounting” by BusinessWeek, Howard Schilit and renowned forensic accounting expert Jeremy Perler take you deeper into the corporate bag of tricks, exposing new levels of accounting gimmickry and arming you with the investigative tools you need to detect:

-Earnings Manipulation Shenanigans: Learn the latest tricks companies use to exaggerate revenue and earnings.

-Cash Flow Shenanigans: Discover new techniques devised by management that allow it to manipulate cash flow as easily as earnings.

-Key Metrics Shenanigans: See how companies use misleading “key”metrics to fool investors about their financial performance.

Financial Shenanigans brings you completely up to date on accounting chicanery in the global markets, shining a light on the most shocking frauds and financial reporting miscreants. This insightful, detailed guide written by recognized experts on the subject provides the knowledge and tools you need to spot even the most subtle signs of financial shenanigans.

Praise for Financial Shenanigans:

Howard Schilit is the authority on forensic accounting. Financial Shenanigans is invaluable reading for market participants seeking to identify deceptive behavior in company financial statements.” -Julian Robertson, legendary investor and founder, Tiger Management

“A must-read! The authors teach forensic financial statement analysis in an easy-to-digest format with lots of war stories. Guaranteed to help investors in their quest to avoid ticking time bombs in their portfolios.”-Marc A. Siegel, board member, Financial Accounting Standards Board

“This is a timeless guide to better understand how financial malfeasance can be spotted early. Financial Shenanigans teaches all of us fraud-detection-made-easy.”-Jules Kroll, pioneering private investigator and founder of Kroll Associates and K2 Global

“Required reading for every investor who desires to avoid financial losses. This new edition is a classic and better than ever.”-Thornton L. O’glove, author, Quality of Earnings

“If the original Financial Shenanigans was the Bible of detecting accounting frauds, then this latest version is the Talmud of cooked books. Regulators, audit committee members, and business journalists should be required to read this work if they are involved in public companies.”-Boris Feldman, partner, Wilson Sonsini Goodrich & Rosati, Palo Alto

“An incisive and entertaining review of the recipes used by corporations and executives to ‘cook the books.’ It’s a must-read for investors, lawyers, corporate directors, and anyone else interested in the integrity of the accounting and governance process.”-Joseph A. Grundfest, professor of law and business and codirector, Rock Center on Corporate Governance, Stanford Law School

Author Biography

Howard Schilit, PhD, CPA, is an internationally recognized expert inforensic accounting and corporate governance. He is thefounder of the Center for Financial Research & Analysis, aglobal research organization.
Jeremy Perler, CFA, CPA, is co-head offorensic accounting research at RiskMetrics Group (formerlyCFRA). He is frequently cited in Barron’s, BusinessWeek, TheWall Street Journal, and other business publications.

Table of Contents

Prefacep. vii
Acknowledgmentsp. xi
Establishing the Foundationp. 1
As Bad as It Getsp. 3
Just Touch Up the X Raysp. 23
Earnings Manipulation Shenanigansp. 43
Earnings Manipulation Shenanigan No. 1: Recording Revenue Too Soonp. 47
Earnings Manipulation Shenanigan No. 2: Recording Bogus Revenuep. 75
Earnings Manipulation Shenanigan No. 3: Boosting Income Using One-Time or Unsustainable Activitiesp. 93
Earnings Manipulation Shenanigan No. 4: Shifting Current Expenses to a Later Periodp. 111
Earnings Manipulation Shenanigan No. 5: Employing Other Techniques to Hide Expenses or Lossesp. 137
Earnings Manipulation Shenanigan No. 6: Shifting Current Income to a Later Periodp. 159
Earnings Manipulation Shenanigan No. 7: Shifting Future Expenses to an Earlier Periodp. 175
Cash Flow Shenanigansp. 189
Cash Flow Shenanigan No. 1: Shifting Financing Cash Inflows to the Operating Sectionp. 197
Cash Flow Shenanigan No. 2: Shifting Normal Operating Cash Outflows to the Investing Sectionp. 213
Cash Flow Shenanigan No. 3: Inflating Operating Cash Flow Using Acquisitions or Disposalsp. 227
Cash Flow Shenanigan No. 4: Boosting Operating Cash Flow Using Unsustainable Activitiesp. 241
Key Metrics Shenanigansp. 253
Key Metrics Shenanigan No. 1: Showcasing Misleading Metrics That Overstate Performancep. 261
Key Metrics Shenanigan No. 2: Distorting Balance Sheet Metrics to Avoid Showing Deteriorationp. 281
Putting It All Togetherp. 297
Shenanigans Recap and Recommendationsp. 299
Indexp. 311
Table of Contents provided by Ingram. All Rights Reserved.

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