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Financial Shenanigans, Fourth Edition: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 4th Edition by Yoni Engelhart, Jeremy Perler, Howard M. Schilit

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9

Earnings Manipulation Shenanigan No. 7: Shifting Future Expenses to the Current Period

Remember the children’s game called “opposite day”? For the kids playing the game, the object is to do things the opposite way from how they normally do them. In this chapter, let us adults have a bit of fun playing the opposite day game with expenses. You recall that the whole point of Earnings Manipulation Shenanigans Nos. 4 and 5 was to either push expenses to a later period or simply make them disappear forever. In the opposite scheme, the objective is to find ways to increase current period expenses.

Doing this involves two basic principles: (1) rather than keeping costs on the Balance Sheet too long (i.e., EM Shenanigan No. 4), rush them to the trash ...

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