Posted on Tuesday, January 8, 2013 by sccl_smart_investing
Financial Shenanigans Certainly, most companies are ethical, but some do take advantage of reporting gray areas or ignore the rules in order to present financial results with a deceptively positive spin or in an altogether misleading way. Given the potential for accounting manipulation and gimmickry, financial statement readers need to exercise skepticism and rigorous due diligence. Schilit and Perler, two recognized forensic accounting experts, have revised and updated their 2002 title. The book hits hard on the many changes in GAAP accounting and how masterful accountants try to fool business analysts with gimmickry. What I like most about the book is that it doesn't’t just expose the tricks that businesses use to fake their financials. Instead, the authors go to great lengths to give examples, and then explain how you can fact check the accounting of any public company. In total there are:
When all is said and done, this is a must-own book for any serious individual stock investor. It’s easy to read, easy to follow (there are literally hundreds of examples), and easy to apply what you learn to companies you watch immediately after reading. Peruse these other resources for information on safeguarding your identity and watching out for fraud.