Table of Contents
Financial Statement Fraud1
| Introduction | 1 |
| Revenue Recognition Fraud | 1 |
| Accounts Receivable Fraud | 5 |
| Inventory Fraud | 8 |
| Expense Manipulation | 12 |
| Liability and Debt Fraud | 15 |
| Asset Overstatement Schemes | 20 |
| Reserve and Accrual Manipulation | 24 |
| Related-Party Transactions | 28 |
| Journal Entry Fraud | 30 |
| Financial Statement Presentation and Disclosure Fraud | 32 |
| Estimation and Fair Value Measurement Fraud | 37 |
| Statement of Cash Flows Fraud | 40 |
| Consolidation and Intercompany Fraud | 43 |
| Fraud in Acquisitions and Disposals | 47 |
| Industry-Specific Fraud Risks | 52 |
| Financial Statement Fraud Flags | 58 |
| Analytical Procedures for Fraud Detection | 60 |
| Fraud Detection Checklists | 62 |
| Summary | 67 |
| Review Questions | 68 |
Answers to Review Questions71
Glossary77
Index79
Course Details
Author: Steven M. Bragg, CPA
Steven Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been a two-time president of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written more than 300 books and courses, including New Controller Guidebook, GAAP Guidebook, and Payroll Management.
Publication/Revision Date: 9/28/2026
Course Exam Questions (online): 30 (multiple-choice)
Program Delivery Method: NASBA QAS Self-Study
Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
* This program is appropriate for professionals at all organizational levels.
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize the accounting rules pertaining to consignment arrangements.
- Recall the factors that support gross revenue presentation.
- Recognize the issues related to the creation of large credit memos.
- Specify the conditions indicating an understated obsolescence reserve.
- Recall the fraud risks associated with holding consigned goods.
- Recognize the indicators of an incorrect inventory count.
- Recall the impact of capitalizing production variances.
- Recognize the indicators of standard cost manipulation.
- Specify the conditions under which expenses should not be capitalized.
- Recall why training should not be capitalized.
- Recognize the situations in which vendor invoice cutoff may arise.
- Recall how certain payroll accounting practices can reduce payroll expenses.
- Recognize how leverage ratios can be incorrectly improved.
- Specify how a contingent liability can create an accrual risk.
- Recall the issues with incorrect debt modification accounting.
- Recognize the indicators of possible asset impairment.
- Recall how depreciation expense can be incorrectly reduced.
- Recognize what goodwill records in an acquisition transaction.
- Specify the valuation inputs used to derive a fair value estimate.
- Recall the assumptions that can alter a reported pension expense.
- Recognize the nature of an asset retirement obligation.
- Recall how a warranty reserve can be manipulated.
- Recognize the actions that can be taken to create a misleading statement of cash flows.
- Specify which cash flow presentations can overstate the amount of operating cash flow.
- Recall the risks that can arise in intercompany accounting.
