1062: Financial Statement Fraud Study Guide

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.