Key Management Ratios, 4th Edition

19

Integrity of accounting statements*

Introduction

• Where we focus attention
• Operating revenue enhancement
• Methods of revenue enhancement – fictitious sales
• Revenue enhancement – clues for detection
• Operating cost
• The balance sheet
• The cash flow statement

To mischief trained, e’en from his mother’s womb, Grown old in fraud, tho’ yet in manhood’s bloom.

Adopting arts, by which gay villains rise, And reach the heights, which honest men despise;

LORD LOUGHBOROUGH (1761)

Introduction

The material in this book so far has been concerned with how we can use values in the published accounts of a company to give us information about its overall performance.

But how certain are we that the numbers shown in the accounts do in fact reflect reality ...