Techniques And Fraud Schemes : Off Balance Sheet Techniques

1148 WordsDec 7, 20155 Pages
Techniques and Fraud Schemes Off Balance Sheet Techniques. The research of Giroux (2008) revealed that Enron resourced to complex and deceptive initiatives of fabricating fictitious and guaranteeing its own Special Purpose Entities (SPE) and off-shore accounts to move debt off the balance sheet and transfers the liabilities of the special purpose entity by recording cash as a cash from operations rather than cash from financing (p.1216). The research of Ahmad et al. (2013) on WorldCom indicated that the top executives overstated earnings by routinely manipulating and treating operation expenses as capital (pp.8-10). Likewise, Crumbley et al. (2013) research on WorldCom indicated that the internal auditor discovered the shift of line cost expenses to capital accounts (p.4121). The research of Crumbley et al. (2013) on Adelphia Communication specified that the company’s management and owners falsified number of cable TV subscribers, created false management fees and were hiding off-balance sheet debt from investors (p.4191). Ahmad et al. (2013) research on Tyco International showed that the companies inflated its cash flow by improperly recording booking expenses as capital (pp.8-10). “Cookie Jar”, Bad Debt Reserve and “Big Bath” Scheme. Giroux (2008) research on Enron further revealed that the energy deregulation cause earnings volatility by using the mark-to-market accounting and/or accrual accounting as opportunity set up a large reserve cookie jar scheme to cover for
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