FR-107 Financial Statement Fraud Analysis and Forensic Accounting

FR-107 Financial Statement Fraud Analysis and Forensic Accounting


Financial statement fraud continues to capture news headlines around the world and the question continually asked is: “Where were the auditors?” This course will help both internal and external auditors gain an understanding of financial statement fraud, how it is committed, the motivation behind it, and, most importantly, how to identify it. The course will provide participants with the fraud knowledge and forensic accounting techniques necessary to identify financial statement fraud where it is occurring. Real-life comprehensive fraud case studies and the forensic accounting and fraud examination techniques used to identify and quantify the frauds will be used throughout the course to further the learning process. Participants will work through fraud case study examples and exercises.


This interactive course will be taught through a combination of lecture, group exercises, and class participation.


  • Recognizing the most common financial statement fraud schemes
  • Identifying the red flags of financial statement fraud
  • Learning how to identify the red flags associated financial statement fraud
  • Understanding the fraud fundamentals used to identify fraud within your organization
  • Understanding the characteristics of fraudsters
  • Learning the techniques most commonly used to detect financial statement fraud



Introduction to Financial Statement Fraud

  • Definitions of fraud
  • Fraudster characteristics
  • Fraud basics – fraud triangle, fraud tree

Auditor Responsibility for Fraud

  • Auditing standards for fraud
  • Fraud programs and governance
  • Fraud Risk Assessments

Improper Revenue Recognition

  • Revenue recognition
  • Long-term contracts
  • Channel stuffing
  • Sales with conditions
  • Fictitious sales/revenue
  • Contingencies
  • Related parties
  • Indirect methods of revenue manipulation

Improper Deferral of Costs and Expenses

  • Accounting method changes
  • No recording
  • Concealment of costs

Improper Asset Valuation

  • Accounts Receivable
  • Inventory
  • Fixed assets
  • Business combinations

Improper Recording of Liabilities

  • Changes in accounting
  • Failure to record
  • Off-balance sheet entities


  • Significant changes and events
  • Related-party transactions
  • Management discussion and analysis

Financial Statement Fraud Detection Methods

  • Ratios
  • Comparative techniques
  • Cash flow
  • Regression analysis
  • Benford’s law
  • Beneish M-Score
  • Damerau-Levenshtein—fuzzy logic





Who Should Attend



Advanced Preparation

2 Days





Internal audit and accounting staff and management

A working knowledge of accounting, fraud basics, and financial statements