solution

1. Unlike other types of fraud, financial statement fraud is usually not concealed and is therefore relatively easy to spot.

2. Fraud indicators, or red flags, can be caused by fraud or by legitimate, non-fraud, factors.

3. Without a confession, forged documents, or repeated fraudulent acts that establish a pattern of dishonesty, convicting someone of fraud is often difficult.

 

Q227

1. According to the 1999 and 2010 COSO studies of fraudulent financial reporting, the most common method used to perpetrate financial statement fraud includes overstating liabilities.

2. According to the 1999 COSO study, most companies that committed financial statement fraud had no audit committee or had an audit committee that met less than twice a year.

3. Michael “Mickey” Monus and Patrick Finn of Phar-Mor used three methods of income statement fraud: account manipulation, overstatement of inventory, and accounting rules manipulations.

 

 

 
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