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Study guide for Financial Statement Fraud

The study guide is provided to guide you through the course material in a step by step format.

Reading assignments are for Financial Statement Fraud Prevention and Detection by Zabihollah Rezaee and Richard Riley

1) Financial Statement Fraud Defined

Reading Assignment: Chapter 1 <<>> Review Question: # 1-8

The learning objectives for this lesson are to gain an understanding of:

  • Will History Repeat Itself?
  • A Closer Look.
  • Definition of Financial Statement Fraud.
  • Nature of Financial Statement Fraud.
  • High-Impact Fraud Cases.
  • Cost of Financial Statement Fraud.
  • Fraud Studies and Regulatory Responses.
  • Antifraud Programs.
  • Occurrence, Prevention, and Detection.
  • Lessons Learned and Applications for Practice.

2) Financial Reporting Structure.

Reading Assignment: Chapter 2  <<>> Review Question: # 9-16

The learning objectives for this lesson are to gain an understanding of:

    • Introduction.
    • Financial Reporting System.
    • Importance of Financial Information.
    • Annual Financial Reporting Requirements.
    • High-Quality Financial Reports.
    • Six-Legged Stool of the Financial Reporting Process.
    • Corporate Financial Reports.
    • Corporate Reporting Challenges.
    • Financial Restatements.
    • Fair Value.
    • Stock Options Accounting.
    • XBRL- Generated Financial Reports.
    • Antifraud Applications for Practice.

    3) Cooking the Books Equals Fraud.

    Reading Assignment: Chapter 3 <<>> Review Question: # 17-22

    The learning objectives for this lesson are to gain an understanding of:

    • Why Does Financial Statement Fraud Occur?
    • Profile of Financial Statement Fraud.
    • Waste Management, Inc.: Financial Statement Fraud Analysis.
    • Antifraud Applications for Practice.
    • Notes.
    • 4 Realization, Prevention, and Detection.
    • Introduction.
    • Realization.
    • The 3Cs Model.
    • Financial Statement Fraud Prevention.
    • Financial Statement Fraud Detection.
    • Correction Procedures.
    • Prevention, Detection, and Correction Strategies.
    • Antifraud Applications for Practice.

    4)  Realization, Prevention, and Detection.

    Reading Assignment: Chapter 4 <<>> Review Questions: # 23-27

    The learning objectives for this lesson are to gain an understanding of:

    • Realization.
    • The 3Cs Model.
    • Financial Statement Fraud Prevention.
    • Financial Statement Fraud Detection.
    • Correction Procedures.
    • Prevention, Detection, and Correction Strategies.
    • Antifraud Applications for Practice.

    5) Taxonomy and Schemes.

    Reading Assignment: Chapter  5 <<>> Review Questions: # 28-34

    The learning objectives for this lesson are to gain an understanding of:

    • Symptoms of Financial Statement Fraud.
    • Common Fraud Schemes.
    • Common Revenue Fraud Schemes.
    • Financial Statement Fraud Red Flags.
    • Whistle-blower Regulations.
    • Antifraud Applications for Practice.

    6) Role of Corporate Governance.

    Reading Assignment: Chapter 6 <<>> Review Questions: # 35-40

    The learning objectives for this lesson are to gain an understanding of:

    • Definition of Corporate Governance.
    • Role of Corporate Governance.
    • Corporate Governance Structure.
    • Characteristics of Corporate Governance.
    • Corporate Governance Functions.
    • Global Corporate Governance.
    • Anti-Fraud Applications for Practice.

    7) Board of Directors' Oversight Responsibility.

    Reading Assignment: Chapter  7 <<>>Review Question: # 41-46

    The learning objectives for this lesson are to gain an understanding of:

    • The Role of the Board of Directors.
    • Composition of the Board of Directors.
    • Functions of the Board of Directors.
    • Attributes of Boards of Directors.
    • Antifraud Applications for Practice.
    • Protocol: A Plan for Reaction to Allegations of Misconduct.

    8) Audit Committees and Corporate Governance.

    Reading Assignment: Chapter 8 <<>> Review Question: # 47-53

    The learning objectives for this lesson are to gain an understanding of:

    • Audit Committee.
    • Audit Committee Attributes.
    • Audit Committee Roles and Responsibilities.
    • Audit Committee Charters.
    • Chairperson of Audit Committees.
    • Audit Committee Report.
    • Audit Committees' Roles in Preventing and Detecting Financial Statement Fraud.
    • Antifraud Applications for Practice

    9) Management Responsibility.

    Reading Assignment: Chapter 9 <<>>Review Questions: # 54-62

    The learning objectives for this lesson are to gain an understanding of:

    • Management Financial Reporting Responsibilities.
    • Management's Role in Financial Statement Fraud Prevention and Protection.
    • Management Motives and Incentives.
    • Management Override of Internal Control.
    • Gamesmanship.
    • Risk Management.
    • Antifraud Applications for Practice.

    10) Role of the Internal Auditor.

    Reading Assignment: Chapter 10<<>>Review Questions: # 63-70

    The learning objectives for this lesson are to gain an understanding of:

    • Internal Auditors and Corporate Governance.
    • Internal Auditors' Responsibilities.
    • Internal Audit Fraud Standards.
    • Efficacy of Internal Audit in Financial Statement Fraud Prevention and Detection.
    • Cooperation between External and Internal Audit.
    • Internal Audits and the Audit Committee.
    • Internal Control.
    • Antifraud Applications for Practice.

    11) Role of External Auditors.

    Reading Assignment: Chapter 11 <<>>Review Questions: # 71-80

    The learning objectives for this lesson are to gain an understanding of:

    • Independent Audit of Financial Statements.
    • Independent Auditor and Financial Statement Fraud.
    • Independent Audit and Internal Control.
    • The Report on Internal Controls.
    • Fraud Detection Audit Procedures.
    • Materiality Guidance.
    • Risk-Factors of Financial Statement Fraud.
    • Communication of Fraud.
    • Antifraud Applications for Practice.

    12) Governing Bodies.

    Reading Assignment: Chapter 12 <<>>Review Questions: # 81-88

    The learning objectives for this lesson are to gain an understanding of:

    • Role of Regulation in Corporate Governance.
    • Sarbanes-Oxley Act Of 2002.
    • Securities and Exchange Commission.
    • SEC's Regulation Fair Disclosure.
    • Financial Fraud Detection and Disclosure Act of 1992.
    • Private Securities Reform Act of 1995.
    • SEC and Financial Statement Fraud.
    • SEC Fraud Prevention Activities.
    • SEC Fraud Detection Activities.
    • SEC Fraud Enforcement Activities.
    • Role of the Financial Accounting Standards Board.
    • Antifraud Applications for Practice.

    13) Fraud in a Digital Environment.

    Reading Assignment: Chapter 13 <<>>Review Questions: # 89-98

    The learning objectives for this lesson are to gain an understanding of:

    • Digital Economy.
    • Electronic Commerce.
    • Changes in Business Environment.
    • Electronic Financial Reporting.
    • Antifraud Applications for Practice.

    14) Fraud Examination Practice, Education and Research.

    Reading Assignment: Chapter 14 <<>>Review Questions: # 99-100

    The learning objectives for this lesson are to gain an understanding of:

    • The Interrelationship: Auditing, Fraud Examination and Forensic Accounting.
    • Forensic Accounting Practice.
    • Fraud Examination.
    • Certification in Financial Forensics.
    • Training Competent and Ethical Fraud Examinaers and Forensic Accountants.
    • Fraud Examination and Forensic Accounting Education.
    • Role of Research in a Profession.
    • Antifraud Applications for Practice.

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