Beruflich Dokumente
Kultur Dokumente
Financial
Shenanigans(FS)
PRESENTED BY
Ranjit Pisharody 75
Pravin Dhas 76
V. Rao Pentakota 80
N.Sharda 93
Sheryl Susan John 94
Subasri 104
OVERVIEW
§ What are shenanigans ?
§ Strategies used for FS
§ Likely candidates for FS
§ Why do Shenanigans exist?
§ Finding Shenanigans
§ Case study: Worldcom, Xerox
§ Road to Reform
What does FS mean?
Actions or omissions
intended to hide or distort
the real financial
performance or financial
condition of an entity.
They range from minor
deceptions to more serious
misapplications of accounting
principles.
Strat egies use d f or FS
§ Overstated Revenue
Overstated revenue
Ø Recording revenue too early
How it started?
Xerox revealed in 2002 that it overstated
it’s revenue by $2 billion
SEC, however, began investigation prior to
Xerox’s announcement and planned to
conduct an audit which revealed a $6
billion overstatement
Manipulations Used
Cookie-Jar Method
Acceleration of revenue from short-term
equipment rentals, which were improperly
classified as long-term leases
Escalating reported earnings to match
expected earnings
Effects
Xerox could count as earnings what was
essentially future revenue
Allowed the company to meet profit
expectations
revenue profit graph
Why?
Role of KPMG
It was the auditing firm of Xerox
The auditing firm knew what was going on
and decided to allow it to continue
Consequence
David M. Walker,
CPA
Comptroller General