Dr. Howard M. Schilit in his book titled
Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports lists seven different shenanigans often committed by perpetrators.
Shenanigans are actions or
omissions designed to hide or distort the real financial performance or
financial condition of a company. The seven shenanigans are namely: (1) Recording revenue too soon; (2) Recording bogus revenue; (3) Boosting income with one time gains; (4) Shifting current expenses to later periods; (5) Failing to disclose all liabilities; (6) Shifting current income to later periods and (7) Shifting future expenses to current periods. In trying to understand the concept of shenanigans, the AFC713 students were given financial statements as they are presented in the annual reports. Then they are to identify transactions that may involved at least 1 financial shenanigan. Congratulations guy, everyone managed to identify at least 3 financial shenanigans.
