Improper revenue recognition is behind 61 percent of all fraudulent accounting schemes, notes Dr. Epstein, and attendees will learn several detection techniques to uncover revenue-related fraud.
(PRWEB) October 21, 2015
International accountants and business executives are preparing to gather in Singapore next week to hear accounting expert Dr. Barry Jay Epstein of Epstein + Nach LLC (http://www.epsteinnach.com) speak on the topic “Fighting Financial Reporting Fraud: A Shared Responsibility for Management and Auditors.” The event, scheduled for Monday, 26 October 2015, is sponsored by Morison Consulting Singapore Pte. Ltd.
“Identifying improper revenue recognition is one of many ways that corporate management and auditors can fight financial reporting fraud,” notes Dr. Epstein. “Improper revenue recognition is behind 61 percent of all fraudulent accounting schemes, according to a 2010 COSO study, and attendees will learn several detection techniques to uncover revenue-related fraud.”
Financial reporting fraud is a serious problem for businesses of all sizes, costing billions of dollars each year. Several of the key concepts that Dr. Epstein will address in the conference are identified below.
- Fraud, because it is concealed, may go on for years before being discovered, usually by accident or by a whistle-blowing employee. Tips, such as from a whistleblower, account for 40 percent of fraud discoveries. Outside auditors typically find only a small percent of actual fraud cases.
- The average fraud lasts 18 months. Some fraud schemes, such as those involving Enron, WorldCom, Bernie Madoff, and Parmalat, can last a decade or more.
- Fraud is the clearest leading indicator of a business’ coming demise. Once weakened by a fraud event, companies may limp along and try to recover, but many fail within a few years.
Conference registrants will learn from real-life financial reporting fraud case studies.
In the 2002 Global Crossing fraud within the telecommunications industry, the “indefeasible rights to use” debacle was one of the events that motivated the large scale IASB-FASB project to re-write revenue recognition standard which was finalized in Spring 2014 and is scheduled for implementation in 2016 or later.
More recently, the 2012 fraud at Shanghai Pharmaceuticals Holdings Co Ltd. fraud scheme boosted reported profit by injecting capital into Shanghai Pioneer. In doing so, it violated Hong Kong Accounting Standard 18 (revenue recognition), since capital injection was not an ordinary activity of the company.
Other forms of financial reporting fraud to be addressed by Dr. Epstein will include various schemes to distort the status of production when percentage-of-completion accounting is used; to report as revenue the movement of goods to a pre-delivery staging area; and to use business acquisitions to opportunistically provide so-called "cookie jar reserves" to create the aura of future profitability.
When financial reporting fraud is ultimately uncovered, blame is often placed on the accountants and auditors. Costly litigation is a frequent outcome, adding further to the social cost of fraud.
Details on the conference are available at http://www.morisonconsultingsingapore.com/.
Following the Singapore conference, Dr. Epstein will also participate in The Morison International Asia Pacific annual conference, being held on the 29-31 October 2015 in Phnom Penh, Cambodia. Morison International is a global association of independent accountants, auditors, tax advisers, business consultants and lawyers.
U.S. and international organizations that are interested in having Dr. Epstein speak at one of their events can contact him via http://www.epsteinnach.com.
ABOUT EPSTEIN + NACH LLC
Epstein + Nach LLC is an international financial reporting consulting firm concentrating in forensic accounting, litigation consulting and expert testimony, technical consultations, engagement quality control review (EQCR), internal inspections, and training for accountants and auditors.
Dr. Barry Jay Epstein, CPA, CFF, is a widely-published international accounting and auditing expert in U.S. Generally Accepted Accounting Principles, International Financial Reporting Standards, and Generally Accepted Auditing Standards. He authored the 3,000 page reference, The Handbook of Accounting and Auditing, now published by Thomson Reuters, from 1988 through 2013. Dr. Epstein also served as the lead author of 26 annual editions of Wiley GAAP (1985-2010), and 14 annual editions of Wiley IFRS (1997-2010), both published by John Wiley & Sons.
Mr. Ralph Nach, CPA, is the author, instructional designer, and facilitator of the popular annual Accounting and Auditing Clinic™ continuing professional education program. He has served as author, co-author, contributing author, or technical editor of a number of widely-utilized technical reference works, including PPC’s Interactive Disclosure Library, PPC/Thomson Reuters, 2011; PPC’s Guide to Preparing Financial Statements, PPC/Thomson Reuters, 2010; Wiley GAAP (2001–2010), John Wiley & Sons; and The Handbook of Accounting and Auditing, Warren, Gorham & Lamont, 1999.
Epstein + Nach LLC is based in Chicago, Ill. Details are available at http://www.epsteinnach.com or 312-464-3520.