PART TWO
Asset-Based Schemes
THE REVENUE-BASED SCHEMES described in Part I involve situations in which the primary motive was to inflate revenue. Since accounting involves two sides to every transaction, schemes involving revenue inflation can impact financial statements in several other manners:
In Part II, schemes involving the overstatement of assets, excluding those impacted through the inflation of revenue, will be the focus. The primary categories of asset-based schemes explained here include:
- Improper capitalization of costs that should be expensed
- Inventory schemes
- Overvaluing assets in connection with fair value accounting
- Failure to properly recognize asset impairments
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