Principles of Fraud Examination, 4th Edition

EXHIBIT 12-1

CHAPTER 12

FINANCIAL STATEMENT FRAUD SCHEMES

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

12-1	Define financial statement fraud and related schemes
12-2	Understand and identify the five classifications of financial statement fraud
12-3	Explain how fictitious revenues schemes are committed, as well as the motivation for, and result of, committing such fraud
12-4	Explain how timing difference schemes are committed, as well as the motivation for, and result of, committing such fraud
12-5	Describe the methods by which concealed liabilities and expenses are used to fraudulently improve a company's balance sheet
12-6	Understand how improper disclosures may be used to mislead potential investors, creditors, or other users of the financial statements
12-7	Recognize how improper asset valuation may inflate the current ratio
12-8	Identify detection and deterrence procedures that may be instrumental in dealing with fraudulent financial statement schemes
12-9	Understand financial statement analysis for detecting fraud
12-10	Identify and characterize current professional and legislative actions that have sought to improve corporate governance, enhance the reliability and quality of financial reports, and foster credibility and effectiveness of audit functions

CASE STUDY: THAT WAY LIES MADNESS¹

“I'm Crazy Eddie!” a goggle-eyed ...