Introduction

Recent financial statement scandals and the lawsuits that have followed have once again brought the accounting profession into the spotlight of the news media and the public. As a result, the profession is no longer entirely self-regulating. Tom Robinson reviews red flags and warnings that appear in the financial statements, which may be cause for further investigation for financial statement problems and misstatements.

Note: Reporting of CPE credit to a CPA's state board is the responsibility of the CPA. Subscribers to CPE Network may not receive duplicate credit for this material, which previously aired in the March 2005 edition of CPE Network Accounting and Auditing Report.

Organization

This text is divided into three chapters:

Chapter 1 reviews recent cases where financial reporting irregularities were involved and points to red flags and clues that were present in the financial statements. Clues may appear in the financial statements prior to the public downfall of an entity, if investors, creditors, and auditors just knew where to look.

Chapter 2 reviews recent accounting scandals.

Chapter 3 contains review problems that highlight the content in Chapters 1–2.

Program Learning Objectives

Upon completion of this program, the user should:

• Understand financial statement irregularities are not a new trend.
• Be able to identify several well-known legal cases related to financial statement irregularities.
• Know where warning signs are most likely to appear in the financial statements.

Speakers/Authors