Description
Book SynopsisPraise for The Financial Numbers Game "So much for the notion 'those who can, do-those who can't, teach. ' Mulford and Comiskey function successfully both as college professors and real-world financial mercenaries. These guys know their balance sheets.
Table of Contents1 Financial Numbers Game 1
Rewards of the Game 2
Classifying Creative Accounting Practices 8
Plan of This Book 13
Summary 14
Glossary 15
Notes 16
2 How the Game Is Played 19
Accounting Policy Choice and Application 19
Fraudulent Financial Reporting 39
Cleaning Up after the Game 44
Clarifying Terminology 49
Summary 50
Glossary 50
Notes 52
3 Earnings Management: A Closer Look 57
What Is Earnings Management? 58
Incentives and Conditions for Earnings Management 60
Earnings Management Techniques 62
Evidence of Earnings Management 68
Effectiveness of Earnings Management 74
Is Earnings Management Good or Bad? 82
Summary 84
Glossary 86
Notes 88
4 The SEC Responds 93
The Chairman’s Speech 93
The Action Plan 96
Subsequent Developments 99
Enforcing the Securities Laws 108
Summary 120
Glossary 122
Notes 123
5 Financial Professionals Speak Out 127
Survey of Financial Professionals 129
Survey Results 133
Summary 156
Glossary 157
Notes 158
6 Recognizing Premature or Fictitious Revenue 159
Is It Premature or Fictitious Revenue? 160
When Should Revenue Be Recognized? 165
Detecting Premature or Fictitious Revenue 185
Checklist to Detect Premature or Fictitious Revenue 191
Summary 193
Glossary 194
Notes 196
7 Aggressive Capitalization and Extended Amortization Policies 201
Cost Capitalization 202
Detecting Aggressive Cost Capitalization Policies 214
Amortizing Capitalized Costs 220
Detecting Extended Amortization Periods 226
Checklist to Detect Aggressive Capitalization and Extended Amortization Policies 229
Summary 231
Glossary 231
Notes 233
8 Misreported Assets and Liabilities 237
Link with Reported Earnings 238
Boosting Shareholders’ Equity 239
Overvalued Assets 240
Undervalued Liabilities 259
Checklist to Detect Misreported Assets and Liabilities 268
Summary 271
Glossary 272
Notes 275
9 Getting Creative with the Income Statement: Classification and Disclosure 279
Current Income Statement Requirements and Practices 280
Reporting Comprehensive Income 292
Creative Income Statement Classifications 295
Creativity with Other Aspects of the Income Statement 304
Summary 311
Glossary 312
Notes 313
10 Getting Creative with the Income Statement: Pro-Forma Measures of Earnings 317
Recasting the Bottom Line: Pro-Forma Earnings Measures 318
Summary 339
Glossary 340
Notes 341
11 Problems with Cash Flow Reporting 345
Reporting Cash Flow 347
Problems with Reported Operating Cash Flow 354
Using Operating Cash Flow to Detect Creative Accounting Practices 370
Checklist for Using Operating Cash Flow to Detect Creative Accounting Practices 373
Summary 373
Glossary 375
Notes 377
Subject Index 379
Company Index 391
