Financial Shenanigans, Fourth Edition: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 4th Edition

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Earnings Manipulation Shenanigan No. 5: Employing Other Techniques to Hide Expenses or Losses

Failing to report all of your expenses when filing your taxes with the Internal Revenue Service would be foolish and pointless because you would only wind up with a higher tax bill. Failing to report all your expenses when filing your financial reports, while also foolish, would be useful if you were running a ruse to trick shareholders into thinking profits were stronger than they really are. Chapter 6 profiled how management can try to hide costs on the Balance Sheet, pretending that they are really assets. This chapter presents a more challenging shenanigan for investors to detect: when management depresses its expenses by failing to record a real ...