Chapter 8
Grading the Four Companies
After going through all of the techniques and tools discussed within the pages of this book, the case studies require summation, with each company given either a passing or a failing grade. It is relatively straightforward to summarize testing outcomes, as the financial forensic examiner need only keep a scorecard as tests are completed. The failing grades should point to areas with unusual variations, unusual relationships, or excessive variability in the financial statements from period to period that suggest the possibility of fraudulent activity. Naturally, the next step in the investigative process includes the gathering of sufficient evidence for prosecution. Here are a few points to remember about analytical tools and techniques:
Analytical procedures, by themselves, are not sufficient evidence for prosecution. Not every test within the scope of this book is necessary for every engagement. Use multiple techniques. Apply results of these tools and techniques to benchmarks.
