MAA261 Lecture Notes - Lecture 5: Financial Statement Analysis, Antivirus Software, Larceny
Document Summary
Week 5: fraud, financial statement analysis and internal controls. Define fraud and identify the types of fraud. Fraud = any intentional act committed to secure an unfair or unlawful gain. Errors are caused unintentionally, out of carelessness, oversight or (cid:373)isi(cid:374)terpretatio(cid:374) of fa(cid:272)ts, ho(cid:449)e(cid:448)er that does(cid:374)(cid:859)t constitute fraud. Fraud is any attempt to deceive another party to gain a benefit. It (cid:373)ay (cid:374)ot (cid:272)o(cid:374)tra(cid:448)e(cid:374)e the (cid:271)lak letter requirements of accounting standards, however it is a breach of the spirit of the rules. Apply the fraud triangle risk factors to explain why people commit financial statement fraud and asset misappropriation. Financial analysis techniques can help discover and examine unexpected relationships in financial information. Unexpected revelations most likely detect errors, but also might be due to fraud. Prepare horizontal, trend and vertical analyses of an entity"s financial statements and be able to interpret these analyses. Horizontal analysis = uses preceding years financial data, focusing on change from base year to later years.
