Synopses & Reviews
To hide falling profits, some managers ply the flexibility found in accounting principles to alter their financial reports. Others go further and use fraud in their deception. It is vitally important that investors, analysts, and other users of financial statements detect these creative accounting practices as early as possible in order to avoid negative earnings surprises and potential share-price declines. The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem.
Authors Mulford and Comiskey also describe the flexibility built into the GAAP principles and discuss ways companies can take advantage of that flexibility while remaining within the rules of proper reporting. The role of the SEC in enforcing securities laws is explored, as are the specific statutes the SEC uses to prosecute those it deems to have gone too far. The authors present the results of a survey of important financial professionals on their views of the propriety of many financial reporting practices and on the steps they use to detect creative accounting practices. This survey shows a wide range of opinions on what is allowable and the best methods for detecting what is not allowable.
The Financial Numbers Game presents an expert analysis of creative accounting procedures, as well as:
* Real-world examples of aggressive and fraudulent financial reports
* What signs to look for in detecting earnings manipulation
* Ready-made checklists for detecting accounting misdeeds
* Advice from such experts as analysts, CFOs, and CPAs
* Help for anyone interested in understanding true financial performance
The Financial Numbers Game offers all users of financial statements a comprehensive resource for understanding, detecting, and avoiding the vast assortment of creative accounting techniques found in practice today.
Review
"The author's purpose is "to equip the financial statement reader to better detect the use of creative accounting practices and avoid the equity-investment and credit-granting mistakes." A book for it's time" (Strategic Finance, March 2002)
"With the collapse of Enron Corp., the January debut of the "Financial Numbers Game" could not have arrived at a more perfect time. The book focuses on educating investors on how to spot "creative accounting Practices." Co-Author Charles W. Mulford outlines a few basic guidelines for detecting-and preventing-creative accounting." (SmartPros/Accounting News and Insights, March 2002)
Synopsis
Praise for The Financial Numbers Game"So much for the notion 'those who can, do—those who can't, teach.' Mulford and Comiskey function successfully both as college professors and real-world financial mercenaries. These guys know their balance sheets. The Financial Numbers Game should serve as a survival manual for both serious individual investors and industry pros who study and act upon the interpretation of financial statements. This unique blend of battle-earned scholarship and quality writing is a must-read/must-have reference for serious financial statement analysis."
—Bob Acker, Editor/Publisher, The Acker Letter
"Wall Street's unforgiving attention to quarterly earnings presents ever-increasing pressure on CFOs to manage earnings and expectations. The Financial Numbers Game provides a clear explanation of the ways in which management can stretch, bend, and break accounting rules to reach the desired bottom line. This arms the serious investor or financial analyst with the healthy skepticism required to drive beyond reported results to a clear understanding of a firm's true performance."
—Mark Hurley, Managing Director, Training and Development Global Corporate and Investment Banking, Bank of America
"After reading The Financial Numbers Game, I feel as though I've taken a master's course in financial statement analysis. Mulford and Comiskey's latest book should be required reading for anyone who is serious about fundamentally analyzing stocks."
—Harry Domash, Investing Columnist, San Francisco Chronicle and Publisher, Winning Investing
The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem.
Synopsis
Wenn vorl ufige Sch tzungen ergeben, dass der tats chliche Gewinn die Erwartungen nicht erf llt, greifen manche Manager zur St tzung des Aktienkurses ihres Unternehmens h ufig zu kreativen Buchf hrungstechniken, um die Bilanzgewinne zu frisieren. Das fr he Erkennen irref hrender Ergebnisse bietet jedoch die Chance einer rechtzeitigen Korrektur und damit zur Vermeidung von berraschenden Negativertr gen und Kursrutschen. Dieses Buch erkl rt Buchsachverst ndigen und Finanzexperten, welche M glichkeiten Unternehmen haben, um das Finanzergebnis falsch darzustellen. Dar ber hinaus schult es das Auge von Finanzanalysten und Buchsachverst ndigen, irref hrende Zahlen in Bilanzen rasch zu erkennen. The Financial Numbers Game erl utert umfassend die Buchf hrungsprobleme, die heute so akut sind und weist auf m gliche Zeichen von Gewinnmanipulationen hin. Mit Checklisten, die sofort einsatzf hige Instrumente zur Aufdeckung von Buchf hrungsmanipulationen bieten. Ein unverzichtbarer Ratgeber f r die Praxis.
Synopsis
After reading The Financial Numbers Game, I feel as though Ive taken a masters level course in financial statement analysis. Mulford and Comiskeys latest book should be required reading for anyone who is serious about fundamentally analyzing stocks. — Harry Domash, San Francisco Chronicle investing columnist and investment newsletter publisher
Synopsis
Praise for The Financial Numbers Game
"So much for the notion 'those who can, do-those who can't, teach.' Mulford and Comiskey function successfully both as college professors and real-world financial mercenaries. These guys know their balance sheets. The Financial Numbers Game should serve as a survival manual for both serious individual investors and industry pros who study and act upon the interpretation of financial statements. This unique blend of battle-earned scholarship and quality writing is a must-read/must-have reference for serious financial statement analysis."
-Bob Acker, Editor/Publisher, The Acker Letter
"Wall Street's unforgiving attention to quarterly earnings presents ever-increasing pressure on CFOs to manage earnings and expectations. The Financial Numbers Game provides a clear explanation of the ways in which management can stretch, bend, and break accounting rules to reach the desired bottom line. This arms the serious investor or financial analyst with the healthy skepticism required to drive beyond reported results to a clear understanding of a firm's true performance."
-Mark Hurley, Managing Director, Training and Development Global Corporate and Investment Banking, Bank of America
"After reading The Financial Numbers Game, I feel as though I've taken a master's course in financial statement analysis. Mulford and Comiskey's latest book should be required reading for anyone who is serious about fundamentally analyzing stocks."
-Harry Domash, Investing Columnist, San Francisco Chronicle and Publisher, Winning Investing
The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem.
About the Author
Charles W. Mulford is the Invesco Chair and Professor of Accounting and Eugene E. Comiskey is the Callaway Chair and Professor of Accounting in the DuPree College of Management at the Georgia Institute of Technology in Atlanta. Both professors have doctorates in accounting and are professionally qualified as certified public accountants. In addition to their work at Georgia Tech, they actively consult with lenders at commercial banks in the United States and abroad. Professors Mulford and Comiskey have published articles on financial reporting and analysis issues in leading academic journals in the accounting and finance fields as well as in such widely read professional journals as the Commercial Lending Review and the Financial Analysts’ Journal. This is the authors’ third book. Their first, Financial Warnings, published in 1996, identifies the warning signs of future corporate earnings difficulties. Their second, Guide to Financial Reporting and Analysis, seeks to simplify the complexities of current-day generally accepted accounting principles as an aid to practicing financial analysts and other users of financial statements.
Table of Contents
1 Financial Numbers Game.Rewards of the Game.
Classifying Creative Accounting Practices.
Plan of This Book.
Summary.
Glossary.
Notes.
2 How the Game Is Played.
Accounting Policy Choice and Application.
Fraudulent Financial Reporting.
Cleaning Up after the Game.
Clarifying Terminology.
Summary.
Glossary.
Notes.
3 Earnings Management: A Closer Look.
What Is Earnings Management?
Incentives and Conditions for Earnings Management.
Earnings Management Techniques.
Evidence of Earnings Management.
Effectiveness of Earnings Management.
Is Earnings Management Good or Bad?
Summary.
Glossary.
Notes.
4 The SEC Responds.
The Chairman’s Speech.
The Action Plan.
Subsequent Developments.
Enforcing the Securities Laws.
Summary.
Glossary.
Notes.
5 Financial Professionals Speak Out.
Survey of Financial Professionals.
Survey Results.
Summary.
Glossary.
Notes.
6 Recognizing Premature or Fictitious Revenue.
Is It Premature or Fictitious Revenue?
When Should Revenue Be Recognized?
Detecting Premature or Fictitious Revenue.
Checklist to Detect Premature or Fictitious Revenue.
Summary.
Glossary.
Notes.
7 Aggressive Capitalization and Extended Amortization Policies.
Cost Capitalization.
Detecting Aggressive Cost Capitalization Policies.
Amortizing Capitalized Costs.
Detecting Extended Amortization Periods.
Checklist to Detect Aggressive Capitalization and Extended Amortization Policies.
Summary.
Glossary.
Notes.
8 Misreported Assets and Liabilities.
Link with Reported Earnings.
Boosting Shareholders’ Equity.
Overvalued Assets.
Undervalued Liabilities.
Checklist to Detect Misreported Assets and Liabilities.
Summary.
Glossary.
Notes.
9 Getting Creative with the Income Statement: Classification and Disclosure.
Current Income Statement Requirements and Practices.
Reporting Comprehensive Income.
Creative Income Statement Classifications.
Creativity with Other Aspects of the Income Statement.
Summary.
Glossary.
Notes.
10 Getting Creative with the Income Statement: Pro-Forma Measures of Earnings.
Recasting the Bottom Line: Pro-Forma Earnings Measures.
Summary.
Glossary.
Notes.
11 Problems with Cash Flow Reporting.
Reporting Cash Flow.
Problems with Reported Operating Cash Flow.
Using Operating Cash Flow to Detect Creative Accounting Practices.
Checklist for Using Operating Cash Flow to Detect Creative Accounting Practices.
Summary.
Glossary.
Notes.
Subject Index.
Company Index.