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Common Auditor Failures: Overlooking Insolvency Risk and Earnings Manipulations

Auditors are often blamed, and not infrequently sued, by clients and third parties alleging a range of failures in the conduct of annual financial-statement examinations. Despite auditors’ decades of efforts to educate clients, investors, regulators and others about the practical limitations of audits, users of financial reports continue to treat “clean opinions” as guarantees of […]

2018-05-31T11:56:08-04:00July 8th, 2015|

Dewey & LeBoeuf: Revenue Fraud and Law Firms

Revenue frauds have long been among the most popular forms of financial reporting manipulations. The SEC, for example, has traditionally identified revenue recognition infractions as being either the top or the second most common variety of the management and accounting frauds it has had to pursue.[i] The ACFE, a professional organization of fraud […]

2018-05-31T11:56:08-04:00June 5th, 2015|

Do Accountants Face Risk as Fiduciaries?

Courts are increasingly treating accountants as fiduciaries, creating significant risk that they — and their insurers — may not realize they face.

Outside accountants – including auditors, those providing other attestation and compilation services, tax preparers and even mere advisers – are increasingly facing allegations that they served their clients in a fiduciary capacity. These are […]

2018-05-31T11:56:09-04:00May 5th, 2015|

Tax Heavens: Methods and Tactics for Corporate Profit Shifting

Accounting expert Barry Jay Epstein co-authored an article titled, “Tax Heavens: Methods and Tactics for Corporate Profit Shifting,” with lead authors Mark Holtzblatt and Eva K. Jermakowicz, published in the January-February 2015 issue of the International Tax Journal. Excerpts from the article appear below.

Taxes paid to governments are among the most significant costs […]

2018-05-31T11:56:09-04:00March 19th, 2015|

An Auditor’s Guide to Uncovering Under-Reported Income in Cash Businesses

Auditing is the process of obtaining and evaluating evidence that supports (or refutes) the material financial statement assertions made by management of the entity under examination.  Auditors must examine sufficient appropriate evidence to support their opinions (per U.S. Auditing Standards, AU-C Section 500, and PCAOB Auditing Standard No. 15), but have always been inclined to […]

2018-05-31T11:56:09-04:00January 20th, 2015|

Revenue Recognition: The Easy Route to Financial Reporting Fraud

Many studies conducted over the years have found that the most common vehicle for financial reporting fraud has been improper revenue recognition – although in a minority of periods this has been exceeded by manipulation of so-called “cookie jar” reserves, which are bogus estimated obligations that can be opportunistically reversed to compensate for earnings shortfalls.  […]

2015-02-03T13:08:03-05:00January 20th, 2015|
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