Reading Between the Lines of Corporate Financial Reports: In Search of Financial Misstatements
Gespeichert in:
| 1. Verfasser: | |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
Cham
Springer International Publishing AG
2020
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| Schlagworte: | |
| Beschreibung: | Description based on publisher supplied metadata and other sources |
| Beschreibung: | 1 Online-Ressource (458 Seiten) |
| ISBN: | 9783030610418 |
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| 245 | 1 | 0 | |a Reading Between the Lines of Corporate Financial Reports |b In Search of Financial Misstatements |
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| 505 | 8 | |a Intro -- Preface -- Contents -- List of Charts -- List of Examples -- List of Tables -- 1 Most Common Distortions in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 1.1 Introduction -- 1.2 Undervaluation or Omission of Relevant Assets on Balance Sheet -- 1.2.1 L'Oréal SA -- 1.2.2 AkzoNobel -- 1.2.3 Hudson's Bay Company -- 1.3 Undervaluation or Omission of Relevant Liabilities on Balance Sheet -- 1.3.1 Rental and Operating Lease Obligations -- 1.3.2 Contingent Liabilities of BP Plc -- 1.3.3 Contingent Liabilities of PG& -- E Corp -- 1.4 Inventory Write-Downs as an Imperfect Signal of Problems with Excess or Obsolete Inventories -- 1.5 Distortions Caused by a Leeway in a Financial Statement Presentation -- 1.5.1 Volkswagen and Daimler -- 1.5.2 Astaldi Group -- 1.6 Distortions of Turnover Ratios Caused by Seasonality, Growth and Tax-Related Factors -- 1.6.1 Distortions Caused by Seasonality of Sales -- 1.6.2 Distortions Caused by Growth Rates of Sales -- 1.6.3 Distortions Caused by Changing Sales Breakdown -- Appendix -- References -- 2 Other "Distortions" in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 2.1 Distortions Caused by Inventory Flow Methods -- 2.1.1 Incomparability of Results When Inventory Prices Change -- 2.1.2 Distortions of FIFO-Based Profits When Inventory Prices Change -- 2.1.3 Distortions of LIFO-Based Profits When Inventory Turnover Changes -- 2.1.4 Conclusions -- 2.1.5 Distortions Caused by Noncontrolling Interests -- 2.2 Distortions Caused by Changes in Accounting Principles, Changes in Accounting Estimates and Corrections of Accounting Errors -- 2.2.1 Incomparability of Results When Accounting Principles Are Changed -- 2.2.2 Incomparability of Results When Accounting Estimates Change | |
| 505 | 8 | |a 2.2.3 Incomparability of Results Caused by Accounting Errors -- 2.3 Distortions Caused by Non-Mandatory Early Adoption of New or Revised Accounting Standards -- 2.3.1 Boeing, General Dynamics, Lockheed Martin and Raytheon -- 2.3.2 Kinaxis Inc. and Tieto Oyj -- Appendix -- References -- 3 Deliberate Accounting Manipulations: Introduction and Revenue-Oriented Accounting Gimmicks -- 3.1 Quality of Earnings as One of the Major Problems of Contemporary Accounting -- 3.2 Links Between Earnings Manipulations and Balance Sheet Distortions -- 3.3 Overstatement of Profits by Overstatement of Revenues -- 3.3.1 Introduction -- 3.3.2 Overstatement of Profits by Premature Recognition of Revenues Which Should Be Deferred -- 3.3.3 Overstatement of Profits by Premature Recognition of Revenues Which Are Conditional on Future and Uncertain Events -- 3.3.4 Overstatement of Profits by Aggressive Usage of Percentage-of-Completion Method of Revenue Recognition -- 3.3.5 Overstatement of Profits by Artificial Sale-and-Buy-Back Transactions -- Appendix -- References -- 4 Deliberate Accounting Manipulations: Expense-Oriented Accounting Gimmicks and Intentional Profit Understatements -- 4.1 Overstatement of Profits by Understatement of Expenses -- 4.1.1 Overstatement of Profits by Understating Write-Downs of Inventories and Receivables -- 4.1.2 Overstatement of Profits by Capitalizing Excess Manufacturing Overheads in Carrying Amount of Inventory -- 4.1.3 Overstatement of Profits by Aggressive Capitalization of Costs in Carrying Amounts of Operating Fixed Assets -- 4.1.4 Overstatement of Profits by Artificial "Outsourcing" of R& -- D Projects -- 4.1.5 Overstatement of Profits by Delays in Depreciating Fixed Assets -- 4.1.6 Overstatement of Profits by Understating Provisions for Liabilities -- 4.2 Understatement of Profits by Overly Conservative Accounting | |
| 505 | 8 | |a 4.2.1 Motivations for Profit Understatements -- 4.2.2 Four Approaches to Accounting -- 4.2.3 Real-Life Examples of (More or Less Deliberate) Profit Understatements -- 4.2.3.1 Example of Pittards plc -- 4.2.3.2 Example of Mesa Air Group -- 4.2.3.3 Example of Takata Corp. -- Appendix -- References -- 5 Evaluation of Financial Statement Reliability and Comparability Based on Auditor's Opinion, Narrative Disclosures and Cash Flow Data -- 5.1 Introduction -- 5.2 Auditor's Opinion -- 5.2.1 L'Oreal -- 5.2.2 Agrokor Group -- 5.2.3 LumX Group Limited -- 5.2.4 CenturyLink Inc. -- 5.2.5 Hanergy Thin Film Power Group Limited -- 5.2.6 Conclusions -- 5.3 Narrative Information Disclosed in Financial Statements -- 5.3.1 OCZ Technology Group Inc. -- 5.3.2 Sino-Forest Corp. -- 5.3.3 AbbVie Inc. -- 5.3.4 Fresenius Group -- 5.3.5 Electronic Arts Inc. and Take-Two Interactive Software Inc. -- 5.4 Discrepancies Between Operating Profits and Operating Cash Flows -- 5.4.1 Toys "R" Us Inc. -- 5.4.2 21st Century Technology Plc -- 5.4.3 Pescanova Group -- 5.4.4 Carillion Plc -- 5.4.5 Cowell e Holdings Inc. -- 5.4.6 Conclusions -- Appendix -- References -- 6 Problems of Comparability and Reliability of Reported Cash Flows -- 6.1 Introduction -- 6.2 Unreliability of Reported Cash Flows When Cash Balances Themselves Are Falsified -- 6.2.1 China MediaExpress Holdings Inc. -- 6.2.2 Satyam Computer Services Limited -- 6.2.3 Patisserie Holdings Plc -- 6.2.4 Conclusions -- 6.3 Spurious Improvements in Operating Cash Flows of Shrinking Businesses -- 6.3.1 Admiral Boats S.A. -- 6.3.2 Claire's Stores Inc. -- 6.3.3 Cowell e Holdings Inc. -- 6.3.4 Conclusions -- 6.4 Distortions of Reported Cash Flows Caused by Non-controlling Interests -- 6.4.1 Distorting Impact of Non-controlling Interests on Reported Cash Flows -- 6.4.2 Real-Life Example of Rallye SA. | |
| 505 | 8 | |a 6.5 Distortions of Reported Cash Flows Caused by Capitalized Intangible Assets -- 6.6 Distortions of Reported Cash Flows Caused by off-Balance Sheet Financing Schemes -- 6.7 Distortions of Reported Cash Flows Caused by Customer Financing Schemes -- 6.8 Distortions of Reported Cash Flows Caused by Business Combinations -- 6.8.1 Distorting Impact of Business Combinations on Reported Cash Flows -- 6.8.2 Real-Life Example of Conviviality Plc -- 6.9 Example of Eroded Intercompany Comparability of Reported Cash Flows -- Appendix -- References -- 7 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Primary Warning Signals -- 7.1 Introduction -- 7.2 Signal No 1: Discrepancies Between Revenue Growth and Inventory Growth -- 7.2.1 Burberry Group Plc -- 7.2.2 Pittards Plc -- 7.2.3 Toshiba Corp -- 7.2.4 Conclusions -- 7.3 Signal No 2: Discrepancies Between Revenue Growth and Receivables Growth -- 7.3.1 Ingenta Plc -- 7.3.2 Aegan Marine Petroleum Network Inc -- 7.3.3 OCZ Technology Group Inc -- 7.3.4 Conclusions -- 7.4 Signal No 3: Discrepancies Between Growth Rates of Revenues and Unbilled Receivables from Long-Term Contracts -- 7.4.1 General Electric Co -- 7.4.2 Carillion Plc -- 7.4.3 Astaldi Group -- 7.4.4 Conclusions -- 7.5 Signal No 4: High or Fast Growing Share of Intangibles in Total Assets -- 7.5.1 GateHouse Media Inc -- 7.5.2 OCZ Technology Group Inc -- 7.5.3 Starbreeze AB -- 7.5.4 Conclusions -- 7.6 Signal No 5: Systematically Falling Turnover of Property, Plant and Equipment -- 7.6.1 Sino-Forest Corp -- 7.6.2 Icelandair Group -- 7.6.3 Jones Energy Inc -- 7.6.4 Conclusions -- 7.7 Signal No 6: Falling Ratio of Depreciation and Amortization to Carrying Amount of Operating Fixed Assets -- 7.7.1 Lufthansa Group -- 7.7.2 Netia S.A -- 7.7.3 Toshiba Corp -- 7.7.4 Conclusions -- Appendix | |
| 505 | 8 | |a References -- 8 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Additional Warning Signals -- 8.1 Signal No 7: Changing Growth Rates of Deferred Revenues -- 8.1.1 US Airways Group Inc. -- 8.1.2 GateHouse Media Inc. -- 8.1.3 Dart Group Plc -- 8.1.4 Conclusions -- 8.2 Signal No 8: Unusual Behavior of Provisions for Future Costs and Liabilities -- 8.2.1 OCZ Technology Group Inc. -- 8.2.2 Nortel Networks Corp. -- 8.2.3 Takata Corp -- 8.2.4 Conclusions -- 8.3 Signal No 9: Discrepancies Between Accounting Earnings and Taxable Income -- 8.3.1 GetBack S.A -- 8.3.2 General Electric Co. -- 8.3.3 Aventine Renewable Energy Holdings Inc. -- 8.4 Signal No 10: Related-Party Transactions -- 8.4.1 GetBack S.A. -- 8.4.2 Hanergy Thin Film Power Group Limited -- 8.4.3 Astaldi Group -- 8.5 Signal No 11: Suspected Behavior of Allowances for Impairments of Inventories and Receivables -- 8.5.1 OCZ Technology Group Inc. -- 8.5.2 EServGlobal Ltd. -- 8.5.3 Delta Apparel Inc. -- 8.6 Signal No 12: Suddenly Changing Breakdown of Inventories -- 8.6.1 Volkswagen Group -- 8.6.2 Nokia Corporation -- 8.6.3 Cowell e Holdings Inc. -- 8.7 Signal No 13: Other Significant and Unusual Trends -- 8.8 Importance of Investigating Combinations of Warnings Signals -- 8.9 When Detecting Accounting Manipulations May Be Difficult -- Appendix -- References -- 9 Techniques of Increasing Comparability and Reliability of Reported Accounting Numbers: Selected Simple Tools -- 9.1 Introduction -- 9.2 Adjustments for Differences in Inventory Accounting Methods -- 9.3 Adjustments for off-Balance Sheet Liabilities -- 9.3.1 Introduction -- 9.3.2 Example of Southern Cross Healthcare -- 9.4 Adjustments for Capitalized Development Costs and Other Intangible Assets | |
| 505 | 8 | |a 9.5 Adjustments for Differences in Depreciation Policies Applied to Property, Plant and Equipment | |
| 650 | 4 | |a Financial statements | |
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Datensatz im Suchindex
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| author | Welc, Jacek |
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| contents | Intro -- Preface -- Contents -- List of Charts -- List of Examples -- List of Tables -- 1 Most Common Distortions in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 1.1 Introduction -- 1.2 Undervaluation or Omission of Relevant Assets on Balance Sheet -- 1.2.1 L'Oréal SA -- 1.2.2 AkzoNobel -- 1.2.3 Hudson's Bay Company -- 1.3 Undervaluation or Omission of Relevant Liabilities on Balance Sheet -- 1.3.1 Rental and Operating Lease Obligations -- 1.3.2 Contingent Liabilities of BP Plc -- 1.3.3 Contingent Liabilities of PG& -- E Corp -- 1.4 Inventory Write-Downs as an Imperfect Signal of Problems with Excess or Obsolete Inventories -- 1.5 Distortions Caused by a Leeway in a Financial Statement Presentation -- 1.5.1 Volkswagen and Daimler -- 1.5.2 Astaldi Group -- 1.6 Distortions of Turnover Ratios Caused by Seasonality, Growth and Tax-Related Factors -- 1.6.1 Distortions Caused by Seasonality of Sales -- 1.6.2 Distortions Caused by Growth Rates of Sales -- 1.6.3 Distortions Caused by Changing Sales Breakdown -- Appendix -- References -- 2 Other "Distortions" in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 2.1 Distortions Caused by Inventory Flow Methods -- 2.1.1 Incomparability of Results When Inventory Prices Change -- 2.1.2 Distortions of FIFO-Based Profits When Inventory Prices Change -- 2.1.3 Distortions of LIFO-Based Profits When Inventory Turnover Changes -- 2.1.4 Conclusions -- 2.1.5 Distortions Caused by Noncontrolling Interests -- 2.2 Distortions Caused by Changes in Accounting Principles, Changes in Accounting Estimates and Corrections of Accounting Errors -- 2.2.1 Incomparability of Results When Accounting Principles Are Changed -- 2.2.2 Incomparability of Results When Accounting Estimates Change 2.2.3 Incomparability of Results Caused by Accounting Errors -- 2.3 Distortions Caused by Non-Mandatory Early Adoption of New or Revised Accounting Standards -- 2.3.1 Boeing, General Dynamics, Lockheed Martin and Raytheon -- 2.3.2 Kinaxis Inc. and Tieto Oyj -- Appendix -- References -- 3 Deliberate Accounting Manipulations: Introduction and Revenue-Oriented Accounting Gimmicks -- 3.1 Quality of Earnings as One of the Major Problems of Contemporary Accounting -- 3.2 Links Between Earnings Manipulations and Balance Sheet Distortions -- 3.3 Overstatement of Profits by Overstatement of Revenues -- 3.3.1 Introduction -- 3.3.2 Overstatement of Profits by Premature Recognition of Revenues Which Should Be Deferred -- 3.3.3 Overstatement of Profits by Premature Recognition of Revenues Which Are Conditional on Future and Uncertain Events -- 3.3.4 Overstatement of Profits by Aggressive Usage of Percentage-of-Completion Method of Revenue Recognition -- 3.3.5 Overstatement of Profits by Artificial Sale-and-Buy-Back Transactions -- Appendix -- References -- 4 Deliberate Accounting Manipulations: Expense-Oriented Accounting Gimmicks and Intentional Profit Understatements -- 4.1 Overstatement of Profits by Understatement of Expenses -- 4.1.1 Overstatement of Profits by Understating Write-Downs of Inventories and Receivables -- 4.1.2 Overstatement of Profits by Capitalizing Excess Manufacturing Overheads in Carrying Amount of Inventory -- 4.1.3 Overstatement of Profits by Aggressive Capitalization of Costs in Carrying Amounts of Operating Fixed Assets -- 4.1.4 Overstatement of Profits by Artificial "Outsourcing" of R& -- D Projects -- 4.1.5 Overstatement of Profits by Delays in Depreciating Fixed Assets -- 4.1.6 Overstatement of Profits by Understating Provisions for Liabilities -- 4.2 Understatement of Profits by Overly Conservative Accounting 4.2.1 Motivations for Profit Understatements -- 4.2.2 Four Approaches to Accounting -- 4.2.3 Real-Life Examples of (More or Less Deliberate) Profit Understatements -- 4.2.3.1 Example of Pittards plc -- 4.2.3.2 Example of Mesa Air Group -- 4.2.3.3 Example of Takata Corp. -- Appendix -- References -- 5 Evaluation of Financial Statement Reliability and Comparability Based on Auditor's Opinion, Narrative Disclosures and Cash Flow Data -- 5.1 Introduction -- 5.2 Auditor's Opinion -- 5.2.1 L'Oreal -- 5.2.2 Agrokor Group -- 5.2.3 LumX Group Limited -- 5.2.4 CenturyLink Inc. -- 5.2.5 Hanergy Thin Film Power Group Limited -- 5.2.6 Conclusions -- 5.3 Narrative Information Disclosed in Financial Statements -- 5.3.1 OCZ Technology Group Inc. -- 5.3.2 Sino-Forest Corp. -- 5.3.3 AbbVie Inc. -- 5.3.4 Fresenius Group -- 5.3.5 Electronic Arts Inc. and Take-Two Interactive Software Inc. -- 5.4 Discrepancies Between Operating Profits and Operating Cash Flows -- 5.4.1 Toys "R" Us Inc. -- 5.4.2 21st Century Technology Plc -- 5.4.3 Pescanova Group -- 5.4.4 Carillion Plc -- 5.4.5 Cowell e Holdings Inc. -- 5.4.6 Conclusions -- Appendix -- References -- 6 Problems of Comparability and Reliability of Reported Cash Flows -- 6.1 Introduction -- 6.2 Unreliability of Reported Cash Flows When Cash Balances Themselves Are Falsified -- 6.2.1 China MediaExpress Holdings Inc. -- 6.2.2 Satyam Computer Services Limited -- 6.2.3 Patisserie Holdings Plc -- 6.2.4 Conclusions -- 6.3 Spurious Improvements in Operating Cash Flows of Shrinking Businesses -- 6.3.1 Admiral Boats S.A. -- 6.3.2 Claire's Stores Inc. -- 6.3.3 Cowell e Holdings Inc. -- 6.3.4 Conclusions -- 6.4 Distortions of Reported Cash Flows Caused by Non-controlling Interests -- 6.4.1 Distorting Impact of Non-controlling Interests on Reported Cash Flows -- 6.4.2 Real-Life Example of Rallye SA. 6.5 Distortions of Reported Cash Flows Caused by Capitalized Intangible Assets -- 6.6 Distortions of Reported Cash Flows Caused by off-Balance Sheet Financing Schemes -- 6.7 Distortions of Reported Cash Flows Caused by Customer Financing Schemes -- 6.8 Distortions of Reported Cash Flows Caused by Business Combinations -- 6.8.1 Distorting Impact of Business Combinations on Reported Cash Flows -- 6.8.2 Real-Life Example of Conviviality Plc -- 6.9 Example of Eroded Intercompany Comparability of Reported Cash Flows -- Appendix -- References -- 7 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Primary Warning Signals -- 7.1 Introduction -- 7.2 Signal No 1: Discrepancies Between Revenue Growth and Inventory Growth -- 7.2.1 Burberry Group Plc -- 7.2.2 Pittards Plc -- 7.2.3 Toshiba Corp -- 7.2.4 Conclusions -- 7.3 Signal No 2: Discrepancies Between Revenue Growth and Receivables Growth -- 7.3.1 Ingenta Plc -- 7.3.2 Aegan Marine Petroleum Network Inc -- 7.3.3 OCZ Technology Group Inc -- 7.3.4 Conclusions -- 7.4 Signal No 3: Discrepancies Between Growth Rates of Revenues and Unbilled Receivables from Long-Term Contracts -- 7.4.1 General Electric Co -- 7.4.2 Carillion Plc -- 7.4.3 Astaldi Group -- 7.4.4 Conclusions -- 7.5 Signal No 4: High or Fast Growing Share of Intangibles in Total Assets -- 7.5.1 GateHouse Media Inc -- 7.5.2 OCZ Technology Group Inc -- 7.5.3 Starbreeze AB -- 7.5.4 Conclusions -- 7.6 Signal No 5: Systematically Falling Turnover of Property, Plant and Equipment -- 7.6.1 Sino-Forest Corp -- 7.6.2 Icelandair Group -- 7.6.3 Jones Energy Inc -- 7.6.4 Conclusions -- 7.7 Signal No 6: Falling Ratio of Depreciation and Amortization to Carrying Amount of Operating Fixed Assets -- 7.7.1 Lufthansa Group -- 7.7.2 Netia S.A -- 7.7.3 Toshiba Corp -- 7.7.4 Conclusions -- Appendix References -- 8 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Additional Warning Signals -- 8.1 Signal No 7: Changing Growth Rates of Deferred Revenues -- 8.1.1 US Airways Group Inc. -- 8.1.2 GateHouse Media Inc. -- 8.1.3 Dart Group Plc -- 8.1.4 Conclusions -- 8.2 Signal No 8: Unusual Behavior of Provisions for Future Costs and Liabilities -- 8.2.1 OCZ Technology Group Inc. -- 8.2.2 Nortel Networks Corp. -- 8.2.3 Takata Corp -- 8.2.4 Conclusions -- 8.3 Signal No 9: Discrepancies Between Accounting Earnings and Taxable Income -- 8.3.1 GetBack S.A -- 8.3.2 General Electric Co. -- 8.3.3 Aventine Renewable Energy Holdings Inc. -- 8.4 Signal No 10: Related-Party Transactions -- 8.4.1 GetBack S.A. -- 8.4.2 Hanergy Thin Film Power Group Limited -- 8.4.3 Astaldi Group -- 8.5 Signal No 11: Suspected Behavior of Allowances for Impairments of Inventories and Receivables -- 8.5.1 OCZ Technology Group Inc. -- 8.5.2 EServGlobal Ltd. -- 8.5.3 Delta Apparel Inc. -- 8.6 Signal No 12: Suddenly Changing Breakdown of Inventories -- 8.6.1 Volkswagen Group -- 8.6.2 Nokia Corporation -- 8.6.3 Cowell e Holdings Inc. -- 8.7 Signal No 13: Other Significant and Unusual Trends -- 8.8 Importance of Investigating Combinations of Warnings Signals -- 8.9 When Detecting Accounting Manipulations May Be Difficult -- Appendix -- References -- 9 Techniques of Increasing Comparability and Reliability of Reported Accounting Numbers: Selected Simple Tools -- 9.1 Introduction -- 9.2 Adjustments for Differences in Inventory Accounting Methods -- 9.3 Adjustments for off-Balance Sheet Liabilities -- 9.3.1 Introduction -- 9.3.2 Example of Southern Cross Healthcare -- 9.4 Adjustments for Capitalized Development Costs and Other Intangible Assets 9.5 Adjustments for Differences in Depreciation Policies Applied to Property, Plant and Equipment |
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| dewey-full | 657.3 |
| dewey-hundreds | 600 - Technology (Applied sciences) |
| dewey-ones | 657 - Accounting |
| dewey-raw | 657.3 |
| dewey-search | 657.3 |
| dewey-sort | 3657.3 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| discipline_str_mv | Wirtschaftswissenschaften |
| format | Electronic eBook |
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Omission of Relevant Assets on Balance Sheet -- 1.2.1 L'Oréal SA -- 1.2.2 AkzoNobel -- 1.2.3 Hudson's Bay Company -- 1.3 Undervaluation or Omission of Relevant Liabilities on Balance Sheet -- 1.3.1 Rental and Operating Lease Obligations -- 1.3.2 Contingent Liabilities of BP Plc -- 1.3.3 Contingent Liabilities of PG&amp -- E Corp -- 1.4 Inventory Write-Downs as an Imperfect Signal of Problems with Excess or Obsolete Inventories -- 1.5 Distortions Caused by a Leeway in a Financial Statement Presentation -- 1.5.1 Volkswagen and Daimler -- 1.5.2 Astaldi Group -- 1.6 Distortions of Turnover Ratios Caused by Seasonality, Growth and Tax-Related Factors -- 1.6.1 Distortions Caused by Seasonality of Sales -- 1.6.2 Distortions Caused by Growth Rates of Sales -- 1.6.3 Distortions Caused by Changing Sales Breakdown -- Appendix -- References -- 2 Other "Distortions" in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 2.1 Distortions Caused by Inventory Flow Methods -- 2.1.1 Incomparability of Results When Inventory Prices Change -- 2.1.2 Distortions of FIFO-Based Profits When Inventory Prices Change -- 2.1.3 Distortions of LIFO-Based Profits When Inventory Turnover Changes -- 2.1.4 Conclusions -- 2.1.5 Distortions Caused by Noncontrolling Interests -- 2.2 Distortions Caused by Changes in Accounting Principles, Changes in Accounting Estimates and Corrections of Accounting Errors -- 2.2.1 Incomparability of Results When Accounting Principles Are Changed -- 2.2.2 Incomparability of Results When Accounting Estimates Change</subfield></datafield><datafield tag="505" ind1="8" ind2=" "><subfield code="a">2.2.3 Incomparability of Results Caused by Accounting Errors -- 2.3 Distortions Caused by Non-Mandatory Early Adoption of New or Revised Accounting Standards -- 2.3.1 Boeing, General Dynamics, Lockheed Martin and Raytheon -- 2.3.2 Kinaxis Inc. and Tieto Oyj -- Appendix -- References -- 3 Deliberate Accounting Manipulations: Introduction and Revenue-Oriented Accounting Gimmicks -- 3.1 Quality of Earnings as One of the Major Problems of Contemporary Accounting -- 3.2 Links Between Earnings Manipulations and Balance Sheet Distortions -- 3.3 Overstatement of Profits by Overstatement of Revenues -- 3.3.1 Introduction -- 3.3.2 Overstatement of Profits by Premature Recognition of Revenues Which Should Be Deferred -- 3.3.3 Overstatement of Profits by Premature Recognition of Revenues Which Are Conditional on Future and Uncertain Events -- 3.3.4 Overstatement of Profits by Aggressive Usage of Percentage-of-Completion Method of Revenue Recognition -- 3.3.5 Overstatement of Profits by Artificial Sale-and-Buy-Back Transactions -- Appendix -- References -- 4 Deliberate Accounting Manipulations: Expense-Oriented Accounting Gimmicks and Intentional Profit Understatements -- 4.1 Overstatement of Profits by Understatement of Expenses -- 4.1.1 Overstatement of Profits by Understating Write-Downs of Inventories and Receivables -- 4.1.2 Overstatement of Profits by Capitalizing Excess Manufacturing Overheads in Carrying Amount of Inventory -- 4.1.3 Overstatement of Profits by Aggressive Capitalization of Costs in Carrying Amounts of Operating Fixed Assets -- 4.1.4 Overstatement of Profits by Artificial "Outsourcing" of R&amp -- D Projects -- 4.1.5 Overstatement of Profits by Delays in Depreciating Fixed Assets -- 4.1.6 Overstatement of Profits by Understating Provisions for Liabilities -- 4.2 Understatement of Profits by Overly Conservative Accounting</subfield></datafield><datafield tag="505" ind1="8" ind2=" "><subfield code="a">4.2.1 Motivations for Profit Understatements -- 4.2.2 Four Approaches to Accounting -- 4.2.3 Real-Life Examples of (More or Less Deliberate) Profit Understatements -- 4.2.3.1 Example of Pittards plc -- 4.2.3.2 Example of Mesa Air Group -- 4.2.3.3 Example of Takata Corp. -- Appendix -- References -- 5 Evaluation of Financial Statement Reliability and Comparability Based on Auditor's Opinion, Narrative Disclosures and Cash Flow Data -- 5.1 Introduction -- 5.2 Auditor's Opinion -- 5.2.1 L'Oreal -- 5.2.2 Agrokor Group -- 5.2.3 LumX Group Limited -- 5.2.4 CenturyLink Inc. -- 5.2.5 Hanergy Thin Film Power Group Limited -- 5.2.6 Conclusions -- 5.3 Narrative Information Disclosed in Financial Statements -- 5.3.1 OCZ Technology Group Inc. -- 5.3.2 Sino-Forest Corp. -- 5.3.3 AbbVie Inc. -- 5.3.4 Fresenius Group -- 5.3.5 Electronic Arts Inc. and Take-Two Interactive Software Inc. -- 5.4 Discrepancies Between Operating Profits and Operating Cash Flows -- 5.4.1 Toys "R" Us Inc. -- 5.4.2 21st Century Technology Plc -- 5.4.3 Pescanova Group -- 5.4.4 Carillion Plc -- 5.4.5 Cowell e Holdings Inc. -- 5.4.6 Conclusions -- Appendix -- References -- 6 Problems of Comparability and Reliability of Reported Cash Flows -- 6.1 Introduction -- 6.2 Unreliability of Reported Cash Flows When Cash Balances Themselves Are Falsified -- 6.2.1 China MediaExpress Holdings Inc. -- 6.2.2 Satyam Computer Services Limited -- 6.2.3 Patisserie Holdings Plc -- 6.2.4 Conclusions -- 6.3 Spurious Improvements in Operating Cash Flows of Shrinking Businesses -- 6.3.1 Admiral Boats S.A. -- 6.3.2 Claire's Stores Inc. -- 6.3.3 Cowell e Holdings Inc. -- 6.3.4 Conclusions -- 6.4 Distortions of Reported Cash Flows Caused by Non-controlling Interests -- 6.4.1 Distorting Impact of Non-controlling Interests on Reported Cash Flows -- 6.4.2 Real-Life Example of Rallye SA.</subfield></datafield><datafield tag="505" ind1="8" ind2=" "><subfield code="a">6.5 Distortions of Reported Cash Flows Caused by Capitalized Intangible Assets -- 6.6 Distortions of Reported Cash Flows Caused by off-Balance Sheet Financing Schemes -- 6.7 Distortions of Reported Cash Flows Caused by Customer Financing Schemes -- 6.8 Distortions of Reported Cash Flows Caused by Business Combinations -- 6.8.1 Distorting Impact of Business Combinations on Reported Cash Flows -- 6.8.2 Real-Life Example of Conviviality Plc -- 6.9 Example of Eroded Intercompany Comparability of Reported Cash Flows -- Appendix -- References -- 7 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Primary Warning Signals -- 7.1 Introduction -- 7.2 Signal No 1: Discrepancies Between Revenue Growth and Inventory Growth -- 7.2.1 Burberry Group Plc -- 7.2.2 Pittards Plc -- 7.2.3 Toshiba Corp -- 7.2.4 Conclusions -- 7.3 Signal No 2: Discrepancies Between Revenue Growth and Receivables Growth -- 7.3.1 Ingenta Plc -- 7.3.2 Aegan Marine Petroleum Network Inc -- 7.3.3 OCZ Technology Group Inc -- 7.3.4 Conclusions -- 7.4 Signal No 3: Discrepancies Between Growth Rates of Revenues and Unbilled Receivables from Long-Term Contracts -- 7.4.1 General Electric Co -- 7.4.2 Carillion Plc -- 7.4.3 Astaldi Group -- 7.4.4 Conclusions -- 7.5 Signal No 4: High or Fast Growing Share of Intangibles in Total Assets -- 7.5.1 GateHouse Media Inc -- 7.5.2 OCZ Technology Group Inc -- 7.5.3 Starbreeze AB -- 7.5.4 Conclusions -- 7.6 Signal No 5: Systematically Falling Turnover of Property, Plant and Equipment -- 7.6.1 Sino-Forest Corp -- 7.6.2 Icelandair Group -- 7.6.3 Jones Energy Inc -- 7.6.4 Conclusions -- 7.7 Signal No 6: Falling Ratio of Depreciation and Amortization to Carrying Amount of Operating Fixed Assets -- 7.7.1 Lufthansa Group -- 7.7.2 Netia S.A -- 7.7.3 Toshiba Corp -- 7.7.4 Conclusions -- Appendix</subfield></datafield><datafield tag="505" ind1="8" ind2=" "><subfield code="a">References -- 8 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Additional Warning Signals -- 8.1 Signal No 7: Changing Growth Rates of Deferred Revenues -- 8.1.1 US Airways Group Inc. -- 8.1.2 GateHouse Media Inc. -- 8.1.3 Dart Group Plc -- 8.1.4 Conclusions -- 8.2 Signal No 8: Unusual Behavior of Provisions for Future Costs and Liabilities -- 8.2.1 OCZ Technology Group Inc. -- 8.2.2 Nortel Networks Corp. -- 8.2.3 Takata Corp -- 8.2.4 Conclusions -- 8.3 Signal No 9: Discrepancies Between Accounting Earnings and Taxable Income -- 8.3.1 GetBack S.A -- 8.3.2 General Electric Co. -- 8.3.3 Aventine Renewable Energy Holdings Inc. -- 8.4 Signal No 10: Related-Party Transactions -- 8.4.1 GetBack S.A. -- 8.4.2 Hanergy Thin Film Power Group Limited -- 8.4.3 Astaldi Group -- 8.5 Signal No 11: Suspected Behavior of Allowances for Impairments of Inventories and Receivables -- 8.5.1 OCZ Technology Group Inc. -- 8.5.2 EServGlobal Ltd. -- 8.5.3 Delta Apparel Inc. -- 8.6 Signal No 12: Suddenly Changing Breakdown of Inventories -- 8.6.1 Volkswagen Group -- 8.6.2 Nokia Corporation -- 8.6.3 Cowell e Holdings Inc. -- 8.7 Signal No 13: Other Significant and Unusual Trends -- 8.8 Importance of Investigating Combinations of Warnings Signals -- 8.9 When Detecting Accounting Manipulations May Be Difficult -- Appendix -- References -- 9 Techniques of Increasing Comparability and Reliability of Reported Accounting Numbers: Selected Simple Tools -- 9.1 Introduction -- 9.2 Adjustments for Differences in Inventory Accounting Methods -- 9.3 Adjustments for off-Balance Sheet Liabilities -- 9.3.1 Introduction -- 9.3.2 Example of Southern Cross Healthcare -- 9.4 Adjustments for Capitalized Development Costs and Other Intangible Assets</subfield></datafield><datafield tag="505" ind1="8" ind2=" "><subfield code="a">9.5 Adjustments for Differences in Depreciation Policies Applied to Property, Plant and Equipment</subfield></datafield><datafield tag="650" ind1=" " ind2="4"><subfield code="a">Financial statements</subfield></datafield><datafield tag="776" ind1="0" ind2="8"><subfield code="i">Erscheint auch als</subfield><subfield code="n">Druck-Ausgabe</subfield><subfield code="a">Welc, Jacek</subfield><subfield code="t">Reading Between the Lines of Corporate Financial Reports</subfield><subfield code="d">Cham : Springer International Publishing AG,c2020</subfield><subfield code="z">9783030610401</subfield></datafield><datafield tag="912" ind1=" " ind2=" "><subfield code="a">ZDB-30-PQE</subfield></datafield><datafield tag="999" ind1=" " ind2=" "><subfield code="a">oai:aleph.bib-bvb.de:BVB01-033605320</subfield></datafield></record></collection> |
| id | DE-604.BV048224587 |
| illustrated | Not Illustrated |
| index_date | 2024-07-03T19:50:39Z |
| indexdate | 2024-07-10T09:32:29Z |
| institution | BVB |
| isbn | 9783030610418 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-033605320 |
| oclc_num | 1231610096 |
| open_access_boolean | |
| physical | 1 Online-Ressource (458 Seiten) |
| psigel | ZDB-30-PQE |
| publishDate | 2020 |
| publishDateSearch | 2020 |
| publishDateSort | 2020 |
| publisher | Springer International Publishing AG |
| record_format | marc |
| spelling | Welc, Jacek Verfasser aut Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements Cham Springer International Publishing AG 2020 ©2020 1 Online-Ressource (458 Seiten) txt rdacontent c rdamedia cr rdacarrier Description based on publisher supplied metadata and other sources Intro -- Preface -- Contents -- List of Charts -- List of Examples -- List of Tables -- 1 Most Common Distortions in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 1.1 Introduction -- 1.2 Undervaluation or Omission of Relevant Assets on Balance Sheet -- 1.2.1 L'Oréal SA -- 1.2.2 AkzoNobel -- 1.2.3 Hudson's Bay Company -- 1.3 Undervaluation or Omission of Relevant Liabilities on Balance Sheet -- 1.3.1 Rental and Operating Lease Obligations -- 1.3.2 Contingent Liabilities of BP Plc -- 1.3.3 Contingent Liabilities of PG& -- E Corp -- 1.4 Inventory Write-Downs as an Imperfect Signal of Problems with Excess or Obsolete Inventories -- 1.5 Distortions Caused by a Leeway in a Financial Statement Presentation -- 1.5.1 Volkswagen and Daimler -- 1.5.2 Astaldi Group -- 1.6 Distortions of Turnover Ratios Caused by Seasonality, Growth and Tax-Related Factors -- 1.6.1 Distortions Caused by Seasonality of Sales -- 1.6.2 Distortions Caused by Growth Rates of Sales -- 1.6.3 Distortions Caused by Changing Sales Breakdown -- Appendix -- References -- 2 Other "Distortions" in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 2.1 Distortions Caused by Inventory Flow Methods -- 2.1.1 Incomparability of Results When Inventory Prices Change -- 2.1.2 Distortions of FIFO-Based Profits When Inventory Prices Change -- 2.1.3 Distortions of LIFO-Based Profits When Inventory Turnover Changes -- 2.1.4 Conclusions -- 2.1.5 Distortions Caused by Noncontrolling Interests -- 2.2 Distortions Caused by Changes in Accounting Principles, Changes in Accounting Estimates and Corrections of Accounting Errors -- 2.2.1 Incomparability of Results When Accounting Principles Are Changed -- 2.2.2 Incomparability of Results When Accounting Estimates Change 2.2.3 Incomparability of Results Caused by Accounting Errors -- 2.3 Distortions Caused by Non-Mandatory Early Adoption of New or Revised Accounting Standards -- 2.3.1 Boeing, General Dynamics, Lockheed Martin and Raytheon -- 2.3.2 Kinaxis Inc. and Tieto Oyj -- Appendix -- References -- 3 Deliberate Accounting Manipulations: Introduction and Revenue-Oriented Accounting Gimmicks -- 3.1 Quality of Earnings as One of the Major Problems of Contemporary Accounting -- 3.2 Links Between Earnings Manipulations and Balance Sheet Distortions -- 3.3 Overstatement of Profits by Overstatement of Revenues -- 3.3.1 Introduction -- 3.3.2 Overstatement of Profits by Premature Recognition of Revenues Which Should Be Deferred -- 3.3.3 Overstatement of Profits by Premature Recognition of Revenues Which Are Conditional on Future and Uncertain Events -- 3.3.4 Overstatement of Profits by Aggressive Usage of Percentage-of-Completion Method of Revenue Recognition -- 3.3.5 Overstatement of Profits by Artificial Sale-and-Buy-Back Transactions -- Appendix -- References -- 4 Deliberate Accounting Manipulations: Expense-Oriented Accounting Gimmicks and Intentional Profit Understatements -- 4.1 Overstatement of Profits by Understatement of Expenses -- 4.1.1 Overstatement of Profits by Understating Write-Downs of Inventories and Receivables -- 4.1.2 Overstatement of Profits by Capitalizing Excess Manufacturing Overheads in Carrying Amount of Inventory -- 4.1.3 Overstatement of Profits by Aggressive Capitalization of Costs in Carrying Amounts of Operating Fixed Assets -- 4.1.4 Overstatement of Profits by Artificial "Outsourcing" of R& -- D Projects -- 4.1.5 Overstatement of Profits by Delays in Depreciating Fixed Assets -- 4.1.6 Overstatement of Profits by Understating Provisions for Liabilities -- 4.2 Understatement of Profits by Overly Conservative Accounting 4.2.1 Motivations for Profit Understatements -- 4.2.2 Four Approaches to Accounting -- 4.2.3 Real-Life Examples of (More or Less Deliberate) Profit Understatements -- 4.2.3.1 Example of Pittards plc -- 4.2.3.2 Example of Mesa Air Group -- 4.2.3.3 Example of Takata Corp. -- Appendix -- References -- 5 Evaluation of Financial Statement Reliability and Comparability Based on Auditor's Opinion, Narrative Disclosures and Cash Flow Data -- 5.1 Introduction -- 5.2 Auditor's Opinion -- 5.2.1 L'Oreal -- 5.2.2 Agrokor Group -- 5.2.3 LumX Group Limited -- 5.2.4 CenturyLink Inc. -- 5.2.5 Hanergy Thin Film Power Group Limited -- 5.2.6 Conclusions -- 5.3 Narrative Information Disclosed in Financial Statements -- 5.3.1 OCZ Technology Group Inc. -- 5.3.2 Sino-Forest Corp. -- 5.3.3 AbbVie Inc. -- 5.3.4 Fresenius Group -- 5.3.5 Electronic Arts Inc. and Take-Two Interactive Software Inc. -- 5.4 Discrepancies Between Operating Profits and Operating Cash Flows -- 5.4.1 Toys "R" Us Inc. -- 5.4.2 21st Century Technology Plc -- 5.4.3 Pescanova Group -- 5.4.4 Carillion Plc -- 5.4.5 Cowell e Holdings Inc. -- 5.4.6 Conclusions -- Appendix -- References -- 6 Problems of Comparability and Reliability of Reported Cash Flows -- 6.1 Introduction -- 6.2 Unreliability of Reported Cash Flows When Cash Balances Themselves Are Falsified -- 6.2.1 China MediaExpress Holdings Inc. -- 6.2.2 Satyam Computer Services Limited -- 6.2.3 Patisserie Holdings Plc -- 6.2.4 Conclusions -- 6.3 Spurious Improvements in Operating Cash Flows of Shrinking Businesses -- 6.3.1 Admiral Boats S.A. -- 6.3.2 Claire's Stores Inc. -- 6.3.3 Cowell e Holdings Inc. -- 6.3.4 Conclusions -- 6.4 Distortions of Reported Cash Flows Caused by Non-controlling Interests -- 6.4.1 Distorting Impact of Non-controlling Interests on Reported Cash Flows -- 6.4.2 Real-Life Example of Rallye SA. 6.5 Distortions of Reported Cash Flows Caused by Capitalized Intangible Assets -- 6.6 Distortions of Reported Cash Flows Caused by off-Balance Sheet Financing Schemes -- 6.7 Distortions of Reported Cash Flows Caused by Customer Financing Schemes -- 6.8 Distortions of Reported Cash Flows Caused by Business Combinations -- 6.8.1 Distorting Impact of Business Combinations on Reported Cash Flows -- 6.8.2 Real-Life Example of Conviviality Plc -- 6.9 Example of Eroded Intercompany Comparability of Reported Cash Flows -- Appendix -- References -- 7 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Primary Warning Signals -- 7.1 Introduction -- 7.2 Signal No 1: Discrepancies Between Revenue Growth and Inventory Growth -- 7.2.1 Burberry Group Plc -- 7.2.2 Pittards Plc -- 7.2.3 Toshiba Corp -- 7.2.4 Conclusions -- 7.3 Signal No 2: Discrepancies Between Revenue Growth and Receivables Growth -- 7.3.1 Ingenta Plc -- 7.3.2 Aegan Marine Petroleum Network Inc -- 7.3.3 OCZ Technology Group Inc -- 7.3.4 Conclusions -- 7.4 Signal No 3: Discrepancies Between Growth Rates of Revenues and Unbilled Receivables from Long-Term Contracts -- 7.4.1 General Electric Co -- 7.4.2 Carillion Plc -- 7.4.3 Astaldi Group -- 7.4.4 Conclusions -- 7.5 Signal No 4: High or Fast Growing Share of Intangibles in Total Assets -- 7.5.1 GateHouse Media Inc -- 7.5.2 OCZ Technology Group Inc -- 7.5.3 Starbreeze AB -- 7.5.4 Conclusions -- 7.6 Signal No 5: Systematically Falling Turnover of Property, Plant and Equipment -- 7.6.1 Sino-Forest Corp -- 7.6.2 Icelandair Group -- 7.6.3 Jones Energy Inc -- 7.6.4 Conclusions -- 7.7 Signal No 6: Falling Ratio of Depreciation and Amortization to Carrying Amount of Operating Fixed Assets -- 7.7.1 Lufthansa Group -- 7.7.2 Netia S.A -- 7.7.3 Toshiba Corp -- 7.7.4 Conclusions -- Appendix References -- 8 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Additional Warning Signals -- 8.1 Signal No 7: Changing Growth Rates of Deferred Revenues -- 8.1.1 US Airways Group Inc. -- 8.1.2 GateHouse Media Inc. -- 8.1.3 Dart Group Plc -- 8.1.4 Conclusions -- 8.2 Signal No 8: Unusual Behavior of Provisions for Future Costs and Liabilities -- 8.2.1 OCZ Technology Group Inc. -- 8.2.2 Nortel Networks Corp. -- 8.2.3 Takata Corp -- 8.2.4 Conclusions -- 8.3 Signal No 9: Discrepancies Between Accounting Earnings and Taxable Income -- 8.3.1 GetBack S.A -- 8.3.2 General Electric Co. -- 8.3.3 Aventine Renewable Energy Holdings Inc. -- 8.4 Signal No 10: Related-Party Transactions -- 8.4.1 GetBack S.A. -- 8.4.2 Hanergy Thin Film Power Group Limited -- 8.4.3 Astaldi Group -- 8.5 Signal No 11: Suspected Behavior of Allowances for Impairments of Inventories and Receivables -- 8.5.1 OCZ Technology Group Inc. -- 8.5.2 EServGlobal Ltd. -- 8.5.3 Delta Apparel Inc. -- 8.6 Signal No 12: Suddenly Changing Breakdown of Inventories -- 8.6.1 Volkswagen Group -- 8.6.2 Nokia Corporation -- 8.6.3 Cowell e Holdings Inc. -- 8.7 Signal No 13: Other Significant and Unusual Trends -- 8.8 Importance of Investigating Combinations of Warnings Signals -- 8.9 When Detecting Accounting Manipulations May Be Difficult -- Appendix -- References -- 9 Techniques of Increasing Comparability and Reliability of Reported Accounting Numbers: Selected Simple Tools -- 9.1 Introduction -- 9.2 Adjustments for Differences in Inventory Accounting Methods -- 9.3 Adjustments for off-Balance Sheet Liabilities -- 9.3.1 Introduction -- 9.3.2 Example of Southern Cross Healthcare -- 9.4 Adjustments for Capitalized Development Costs and Other Intangible Assets 9.5 Adjustments for Differences in Depreciation Policies Applied to Property, Plant and Equipment Financial statements Erscheint auch als Druck-Ausgabe Welc, Jacek Reading Between the Lines of Corporate Financial Reports Cham : Springer International Publishing AG,c2020 9783030610401 |
| spellingShingle | Welc, Jacek Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements Intro -- Preface -- Contents -- List of Charts -- List of Examples -- List of Tables -- 1 Most Common Distortions in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 1.1 Introduction -- 1.2 Undervaluation or Omission of Relevant Assets on Balance Sheet -- 1.2.1 L'Oréal SA -- 1.2.2 AkzoNobel -- 1.2.3 Hudson's Bay Company -- 1.3 Undervaluation or Omission of Relevant Liabilities on Balance Sheet -- 1.3.1 Rental and Operating Lease Obligations -- 1.3.2 Contingent Liabilities of BP Plc -- 1.3.3 Contingent Liabilities of PG& -- E Corp -- 1.4 Inventory Write-Downs as an Imperfect Signal of Problems with Excess or Obsolete Inventories -- 1.5 Distortions Caused by a Leeway in a Financial Statement Presentation -- 1.5.1 Volkswagen and Daimler -- 1.5.2 Astaldi Group -- 1.6 Distortions of Turnover Ratios Caused by Seasonality, Growth and Tax-Related Factors -- 1.6.1 Distortions Caused by Seasonality of Sales -- 1.6.2 Distortions Caused by Growth Rates of Sales -- 1.6.3 Distortions Caused by Changing Sales Breakdown -- Appendix -- References -- 2 Other "Distortions" in a Financial Statement Analysis Caused by Objective Weaknesses of Accounting and Analytical Methods -- 2.1 Distortions Caused by Inventory Flow Methods -- 2.1.1 Incomparability of Results When Inventory Prices Change -- 2.1.2 Distortions of FIFO-Based Profits When Inventory Prices Change -- 2.1.3 Distortions of LIFO-Based Profits When Inventory Turnover Changes -- 2.1.4 Conclusions -- 2.1.5 Distortions Caused by Noncontrolling Interests -- 2.2 Distortions Caused by Changes in Accounting Principles, Changes in Accounting Estimates and Corrections of Accounting Errors -- 2.2.1 Incomparability of Results When Accounting Principles Are Changed -- 2.2.2 Incomparability of Results When Accounting Estimates Change 2.2.3 Incomparability of Results Caused by Accounting Errors -- 2.3 Distortions Caused by Non-Mandatory Early Adoption of New or Revised Accounting Standards -- 2.3.1 Boeing, General Dynamics, Lockheed Martin and Raytheon -- 2.3.2 Kinaxis Inc. and Tieto Oyj -- Appendix -- References -- 3 Deliberate Accounting Manipulations: Introduction and Revenue-Oriented Accounting Gimmicks -- 3.1 Quality of Earnings as One of the Major Problems of Contemporary Accounting -- 3.2 Links Between Earnings Manipulations and Balance Sheet Distortions -- 3.3 Overstatement of Profits by Overstatement of Revenues -- 3.3.1 Introduction -- 3.3.2 Overstatement of Profits by Premature Recognition of Revenues Which Should Be Deferred -- 3.3.3 Overstatement of Profits by Premature Recognition of Revenues Which Are Conditional on Future and Uncertain Events -- 3.3.4 Overstatement of Profits by Aggressive Usage of Percentage-of-Completion Method of Revenue Recognition -- 3.3.5 Overstatement of Profits by Artificial Sale-and-Buy-Back Transactions -- Appendix -- References -- 4 Deliberate Accounting Manipulations: Expense-Oriented Accounting Gimmicks and Intentional Profit Understatements -- 4.1 Overstatement of Profits by Understatement of Expenses -- 4.1.1 Overstatement of Profits by Understating Write-Downs of Inventories and Receivables -- 4.1.2 Overstatement of Profits by Capitalizing Excess Manufacturing Overheads in Carrying Amount of Inventory -- 4.1.3 Overstatement of Profits by Aggressive Capitalization of Costs in Carrying Amounts of Operating Fixed Assets -- 4.1.4 Overstatement of Profits by Artificial "Outsourcing" of R& -- D Projects -- 4.1.5 Overstatement of Profits by Delays in Depreciating Fixed Assets -- 4.1.6 Overstatement of Profits by Understating Provisions for Liabilities -- 4.2 Understatement of Profits by Overly Conservative Accounting 4.2.1 Motivations for Profit Understatements -- 4.2.2 Four Approaches to Accounting -- 4.2.3 Real-Life Examples of (More or Less Deliberate) Profit Understatements -- 4.2.3.1 Example of Pittards plc -- 4.2.3.2 Example of Mesa Air Group -- 4.2.3.3 Example of Takata Corp. -- Appendix -- References -- 5 Evaluation of Financial Statement Reliability and Comparability Based on Auditor's Opinion, Narrative Disclosures and Cash Flow Data -- 5.1 Introduction -- 5.2 Auditor's Opinion -- 5.2.1 L'Oreal -- 5.2.2 Agrokor Group -- 5.2.3 LumX Group Limited -- 5.2.4 CenturyLink Inc. -- 5.2.5 Hanergy Thin Film Power Group Limited -- 5.2.6 Conclusions -- 5.3 Narrative Information Disclosed in Financial Statements -- 5.3.1 OCZ Technology Group Inc. -- 5.3.2 Sino-Forest Corp. -- 5.3.3 AbbVie Inc. -- 5.3.4 Fresenius Group -- 5.3.5 Electronic Arts Inc. and Take-Two Interactive Software Inc. -- 5.4 Discrepancies Between Operating Profits and Operating Cash Flows -- 5.4.1 Toys "R" Us Inc. -- 5.4.2 21st Century Technology Plc -- 5.4.3 Pescanova Group -- 5.4.4 Carillion Plc -- 5.4.5 Cowell e Holdings Inc. -- 5.4.6 Conclusions -- Appendix -- References -- 6 Problems of Comparability and Reliability of Reported Cash Flows -- 6.1 Introduction -- 6.2 Unreliability of Reported Cash Flows When Cash Balances Themselves Are Falsified -- 6.2.1 China MediaExpress Holdings Inc. -- 6.2.2 Satyam Computer Services Limited -- 6.2.3 Patisserie Holdings Plc -- 6.2.4 Conclusions -- 6.3 Spurious Improvements in Operating Cash Flows of Shrinking Businesses -- 6.3.1 Admiral Boats S.A. -- 6.3.2 Claire's Stores Inc. -- 6.3.3 Cowell e Holdings Inc. -- 6.3.4 Conclusions -- 6.4 Distortions of Reported Cash Flows Caused by Non-controlling Interests -- 6.4.1 Distorting Impact of Non-controlling Interests on Reported Cash Flows -- 6.4.2 Real-Life Example of Rallye SA. 6.5 Distortions of Reported Cash Flows Caused by Capitalized Intangible Assets -- 6.6 Distortions of Reported Cash Flows Caused by off-Balance Sheet Financing Schemes -- 6.7 Distortions of Reported Cash Flows Caused by Customer Financing Schemes -- 6.8 Distortions of Reported Cash Flows Caused by Business Combinations -- 6.8.1 Distorting Impact of Business Combinations on Reported Cash Flows -- 6.8.2 Real-Life Example of Conviviality Plc -- 6.9 Example of Eroded Intercompany Comparability of Reported Cash Flows -- Appendix -- References -- 7 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Primary Warning Signals -- 7.1 Introduction -- 7.2 Signal No 1: Discrepancies Between Revenue Growth and Inventory Growth -- 7.2.1 Burberry Group Plc -- 7.2.2 Pittards Plc -- 7.2.3 Toshiba Corp -- 7.2.4 Conclusions -- 7.3 Signal No 2: Discrepancies Between Revenue Growth and Receivables Growth -- 7.3.1 Ingenta Plc -- 7.3.2 Aegan Marine Petroleum Network Inc -- 7.3.3 OCZ Technology Group Inc -- 7.3.4 Conclusions -- 7.4 Signal No 3: Discrepancies Between Growth Rates of Revenues and Unbilled Receivables from Long-Term Contracts -- 7.4.1 General Electric Co -- 7.4.2 Carillion Plc -- 7.4.3 Astaldi Group -- 7.4.4 Conclusions -- 7.5 Signal No 4: High or Fast Growing Share of Intangibles in Total Assets -- 7.5.1 GateHouse Media Inc -- 7.5.2 OCZ Technology Group Inc -- 7.5.3 Starbreeze AB -- 7.5.4 Conclusions -- 7.6 Signal No 5: Systematically Falling Turnover of Property, Plant and Equipment -- 7.6.1 Sino-Forest Corp -- 7.6.2 Icelandair Group -- 7.6.3 Jones Energy Inc -- 7.6.4 Conclusions -- 7.7 Signal No 6: Falling Ratio of Depreciation and Amortization to Carrying Amount of Operating Fixed Assets -- 7.7.1 Lufthansa Group -- 7.7.2 Netia S.A -- 7.7.3 Toshiba Corp -- 7.7.4 Conclusions -- Appendix References -- 8 Evaluation of Financial Statement Reliability and Comparability Based on Quantitative Tools Other Than Cash Flows: Additional Warning Signals -- 8.1 Signal No 7: Changing Growth Rates of Deferred Revenues -- 8.1.1 US Airways Group Inc. -- 8.1.2 GateHouse Media Inc. -- 8.1.3 Dart Group Plc -- 8.1.4 Conclusions -- 8.2 Signal No 8: Unusual Behavior of Provisions for Future Costs and Liabilities -- 8.2.1 OCZ Technology Group Inc. -- 8.2.2 Nortel Networks Corp. -- 8.2.3 Takata Corp -- 8.2.4 Conclusions -- 8.3 Signal No 9: Discrepancies Between Accounting Earnings and Taxable Income -- 8.3.1 GetBack S.A -- 8.3.2 General Electric Co. -- 8.3.3 Aventine Renewable Energy Holdings Inc. -- 8.4 Signal No 10: Related-Party Transactions -- 8.4.1 GetBack S.A. -- 8.4.2 Hanergy Thin Film Power Group Limited -- 8.4.3 Astaldi Group -- 8.5 Signal No 11: Suspected Behavior of Allowances for Impairments of Inventories and Receivables -- 8.5.1 OCZ Technology Group Inc. -- 8.5.2 EServGlobal Ltd. -- 8.5.3 Delta Apparel Inc. -- 8.6 Signal No 12: Suddenly Changing Breakdown of Inventories -- 8.6.1 Volkswagen Group -- 8.6.2 Nokia Corporation -- 8.6.3 Cowell e Holdings Inc. -- 8.7 Signal No 13: Other Significant and Unusual Trends -- 8.8 Importance of Investigating Combinations of Warnings Signals -- 8.9 When Detecting Accounting Manipulations May Be Difficult -- Appendix -- References -- 9 Techniques of Increasing Comparability and Reliability of Reported Accounting Numbers: Selected Simple Tools -- 9.1 Introduction -- 9.2 Adjustments for Differences in Inventory Accounting Methods -- 9.3 Adjustments for off-Balance Sheet Liabilities -- 9.3.1 Introduction -- 9.3.2 Example of Southern Cross Healthcare -- 9.4 Adjustments for Capitalized Development Costs and Other Intangible Assets 9.5 Adjustments for Differences in Depreciation Policies Applied to Property, Plant and Equipment Financial statements |
| title | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_auth | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_exact_search | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_exact_search_txtP | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_full | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_fullStr | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_full_unstemmed | Reading Between the Lines of Corporate Financial Reports In Search of Financial Misstatements |
| title_short | Reading Between the Lines of Corporate Financial Reports |
| title_sort | reading between the lines of corporate financial reports in search of financial misstatements |
| title_sub | In Search of Financial Misstatements |
| topic | Financial statements |
| topic_facet | Financial statements |
| work_keys_str_mv | AT welcjacek readingbetweenthelinesofcorporatefinancialreportsinsearchoffinancialmisstatements |