© D.L. Crumbley
Types of Financial Statement Fraud Schemes (contd …)
Fictitious Assets and/or Reductions of Expenses/Liabilities (e.g., recording consigned inventory as inventory). Cendant Corporation created fictitious revenues, and Knowledge Ware inflated revenues with phony software sales.
Overvalued Assets or Undervalued Expenses/Liabilities (e.g., insufficient allowance for bad debts).
Omitted or Undervalued Liabilities (e.g., understated pension expenses).
Omitted or Improper Disclosures (e.g., stock option expense estimates).