lNOTE: sOur sfocus s= sPERCV sassertion
(vs. sintuitive s(text) sassertions slike s'accuracy' s. sTells sus snot snature sof
sinaccuracy/overstatement sor sunderstatement sbut sdoes sif sits san serror) s- sans---Why?
-(P) sPresentation/classification sand sdisclosure s(notes): sis san sacct scorrectly sclassified son
sbs/is. sDisclosure sin sfootnotes sor smd&a sfor s10ks.
-(E) sExistence/occurrence sor soverstatemen s(validity)t: soverstmt sof sassets sand srev
-(R) sRights sor sownership sof sespecially sassets: sright sto sowner sor sshould sasset srly sexist
son sbs
-(C) sCompleteness sor sunderstatement: sexps sand sliabs sunderstatements.
-(V) sValuation s(per sunit sprice sor s'value')* s: spreetmterprises sare svalued. sFocuses son
sprices sand snot squantity. sIf scurrent s[rice sof ssecurity sreflected sin sfinancials. sIs snet sreal sval
sof sar sand slcm sappropriately sreflected sin sfinancials. sIs sthe snet sppe sasset sval sor sorig scost
sor sprice s- saccum sdepr sto sdate saprop sreflected sin sfin
Data stypes: sflow scharts sor sprocedures swe swanna sperform sto sget scomfy sw ssegregation
sof sduties sand ssupporting sinternal scontrol snarratives. sFlowchart sto svisualize swhats sgoing
son sand ssome snarrative sdescription sacross seach sof sthe sdepartments, swhat stheir
sresponsibilities sare.
l(Further) sIdentification sof sSegregation sof sDuties sConflicts
-Q2 s(TOUGH): s(In scontrast sto s'traditional' sdata stypes), swhat sis san s'ideal' sdata stype(s) sto
sassess ssegregation sof sduties srisk? s- sans--100% saccess slog sreview. sGoing sinto saccess
slog sthat stells sus severy stime san sindividual sfrom sthe scredit sdept, sbilling, setc saccesses sthe
serp snetwork sand swhat sportion sof snetwork sthey saccessed. sFirms sare sdeveloping
EARNINGS sMANAGEMENT s- sans--l: sNON-fraudulent smeans sto sincrease srevenues sà
sincrease sin snet sincome sto sjust smeet squarterly/annual sforecasted sEPS swithout sviolating
sGAAP. sContinuoum sbetween searnings smgmt. sand soutright sintent sto sdeceive sor sfraud s.
sPart sof sdif sis smateriality. sEm sshould snever sinvolve sa smaterial sadjustment sto sthe
sfinancials sand snature sof sinvestments sshould sbe smore smute sthan san soutright sfraud.
What sare s2 sor s3 sexamples sof searnings smanagement sapplied sto srevenue s(to smeet
squarterly/annual sforecasted sEPS)? s- sans---NOTE: sThese s'examples' swill sresult sin sa
smuted s'risk sresponse':
l1. smore sliberal scredit spolicies sespecially sduring sa srecession. s2020, ssome sfirms sand
shospitality sare sdesperately string sto skeep ssales sas sthey swere sbefore scovid. sW srelaxing
scredit spolicies sthe schallenge sis sin snext spd sthere swill sbe slarge sincrease sin sbad sdebt sexps
l2. smdoest sincrease sin ssales sdiscounts. sChannel sstuffing s- snear spd send
l3. slegit sacceleration sof swork son slt sconstruction sprojects sresulting sin slegit sincrease sin
spercentage sof scompletion sof sthat sproject sand sincrease sin srevenue stherefore.
l4. s1 stime sshift sform slifo sto sfifo sinv saccounting
Another srisk sin srecession: sbig sbath s- sresults sin soverstatement sof sar sallow sfor sbad sdebts.
sIs sit sem sor sintend sto sdeceive.
s'control' sto sthe scustomer; ssatisfied sat sa spoint sin stime sOR sover stime s(e.g., s% sof
scompletion sw sconstruction sor sunearned srevenue sà srevenue)
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