Good evening all:
Great job everyone did this past week on our discussions forums. I really appreciate everyone's contributions to the forums and how everyone's questions and responses align.
Many great suggestions were given on the Debt-to-Equity ratios. Several of the ways mentioned included those legal and those that might be considered fraudulent;
- Increasing sales or paying off debt
- Restructuring debt or selling assets or issuing more stock
- The company could fail to disclose everything, miscategorized their debt on their financials, move the debt to equity, etc., their ratio would look better, but it is dishonest and unlikely they would get away with it when the auditors came around.
- The company might try and reduce their debt-to-equity ratio (abandoning GAAP principles) by overstating company assets and/or understating debt. They could do this by capitalizing accounts that should be expensed, creating fake sales transactions, and/or overstating inventory (which also overstates net income and understates cost of goods sold).
The articles everyone found this week were very good. I hope you have taken the time to check each one out. They aligned perfectly with the chapter and really provided an insight into the topic of conducting fraud investigations and interviewing. I hope you found more details out this week that will make you more attentive and notice activities that are happening in your workplace or others that you visit. I find the body language component very interesting as it applies to interrogations and interviewing. Always reminds me of a child trying to lie to their parents or teachers. Some can't do it, some are good at it and others are great at it.
Continue the great participation and I look forward to everyone's post this week.
Thanks,
Professor McMillian