Risk Factors for Accounting Fraud

All companies have an incentive to manipulate their financial statements to make them appear better than the company's true performance. We've learned that accounting fraud is more likely to occur when one or more of the following risk factors is present:
(1) the company is going public
(2) the company is just shy of meeting an earnings target
(3) the company of trying to maintain a streak (e.g., 20 consecutive quarters of earnings growth)
(4) there has been high turnover at the CFO position
(5) the CEO or CFO abruptly resigns
(6) the CEO is close to receiving a bonus
(7) the company is close to violating a debt covenant
(8) the company is facing intense political scrutiny
(9) the company frequently takes restructuring charges
In addition, companies with the following characteristics are at a great risk for committing accounting fraud:
(a) the company is small
(b) the company has weak or nonexistent internal controls
(c) there is no audit committee, or the audit committee meets infrequently
(d) the company's board exercises little oversight over a dictatorial CEO
(e) the company engages in multiple related-party transactions
(f) the company culture pressures managers to meet financial targets by any means necessary
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[@kingofthecosmos3253]

Good video! Keep up the good work

[@Edspira]

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