Page 157 - CFF

Red flags of financial statement fraud

Company Management Accounting Operating Financial
characteristics and personnel anomalies anomalies condition

Complex Aggressive Unusual accounting Frequent transfers Weak (or
organizational management style practices among entity bank weakening)
structure accounts financial condition

Weak governance High dependence High frequency of Unusual Worsening
structure on operating financial statement transactions in company
performance restatements records operations

Weak internal Inadequate Unusual Unusual transfers to Worsening industry
control processes personnel practices transactions offshore banks environment and
recorded at year- conditions
end

Complex third-party Misrecorded or Frequent or unusual
transactions unrecorded related-party
transactions transactions

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