Page 155 - CFF

Methods to commit financial statement fraud — Asset

misstatement

• Commonly misstated assets

– Accounts receivable due to fictitious sales or re-dating
– Inventory

– Property, plant, and equipment accounts

• Embezzlement or misappropriation of assets can lead to asset

overstatements

• Kiting and lapping can lead to overstatements on financial statements

• Ponzi schemes create fictitious assets

• Assets can be misstated by understating their bases

• In divorces, assets may be purposely understated

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