5-1 Discussion: Finding Hints of Fraud Within Financial StatementsPrevious Next Review the case studies from the readings thus far in the course and examine them in terms of what information within t

Module Five: Financial Statements and Ratio Analysis

This is the recommended plan for completing the reading assignments and activities within the module. Additional information can be found in the module Reading and Resources section and in the task list.

Review the reading and resources and write an initial post in the discussion.

Reading and Resources

Required Resources

Textbook: Detecting Accounting Fraud: Analysis and Ethics, Chapter 5

This chapter focuses on WorldCom’s improper accounting, namely improper use of acquisition or merger reserves, improper asset valuation, and improper capitalization of expenses. As your read, consider these questions:

What were the signals in the financial statements that could have alerted someone that the company may be understating its expenses?

What were the major categories of gatekeepers that were identified as being responsible for the control of a company?

Textbook: Detecting Accounting Fraud: Analysis and Ethics, Chapter 5
This chapter focuses on WorldCom’s improper accounting, namely improper use of acquisition or merger reserves, improper asset valuation, and improper capitalization of expenses. As your read, consider these questions:

What were the signals in the financial statements that could have alerted someone that the company may be understating its expenses?
What were the major categories of gatekeepers that were identified as being responsible for the control of a company?

Common Ratios Used in Analyzing Financial Statements PDF

This document lists and describes the formulas for commonly used ratios in financial statement analysis.

Additional Support (Optional)

Financial Analysis Topics

https://www.accountingtools.com/summary-financial-analysis

This website provides links to a variety of topics within financial analysis, such as financial statement analysis, income statement analysis, and liquidity ratio analysis, among many others.

Data Analytics Helps Auditors Gain Deep Insight

https://www.journalofaccountancy.com/issues/2015/apr/data-analytics-for-auditors.html

This article discusses how using technology offers auditors a different perspective by providing an opportunity to test full data sets rather than just samples.