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Overcoming deceptive accounting and earnings manipulation

Course objective

By the end of this course, participants will:

    1. Be quipped to examine the major areas where public listed companies use accounting policies ("cosmetic accounting") to optimize their financial statements;
    2. Understand how to review the financial statements of key companies identified as using such methodologies, and understand where such usage my have been apparent to skilled analysts;
    3. Develop their skills in identifying methods of adjusting financial statements, and using adjustments in spreadsheets, to compensate for unusual accounting policies; and
    4. Possess and apply a set of tools and analytical approaches to enable them to overcome most of the cosmetic accounting practices.

Course duration
Three days

Presenter
Andrew McRobert, or presenter trained by him. An abbreviated curriculum vitae of Andrew McRobert can be viewed here.

Course agenda
A copy of the 'standard' course agenda is attached herewith. The course has been designed in a series of modules. In respect of each country in which it is presented, a number of changes are made to the 'standard' model, in order to make it country specific:

    1. References to the current codes of corporate governance and ethics are changed to reflect the current position in the country;
    2. A version of the case exercises relevant to the country in question is substituted;

In addition, the course may be amended, if required, as follows:

    1. Substitution of case studies drawn from the financial institution's own portfolio;
    2. Inclusion of additional material on topics of particular interest to a specific financial institution; and
    3. Any other modifications that a client considers necessary.

Basic Course Agenda

Date

Subject

Topics
Day 1 AM
  • Accounting concepts, policies and disclosure requirements
  • Cosmetic accounting is alive and well
  • A brief review of the fundamentals in the light of current accounting practices
  • The twelve major areas where cosmetic accounting is being used, how to detect it and how to compensate for it.
Day 1 PM
  • Off balance sheet items
  • Consolidations - the issue that sunk Enron
  • Where they are, what they mean and how to take them into account in financial analysis
  • What are US and international requirements, how do analysts identify non-consolidated entities and how should they adjust for them instant assets and instant shareholders' funds
Day 2 AM
  • Goodwill and other intangibles
  • Instant assets and instant shareholders' funds
Day 2 PM
  • Earnings
  • Profits
  • Executive options
  • Detecting unusual accounting practices
  • A fresh look at what is being reported, and what is wanted
  • Should they be included in analysts' assessment of companies' financial status & earnings, and how?
Day 3 AM
  • Segment reporting
  • Cash flow
  • An overlooked source of information
  • Focus on sustainable operating cash flow

contact details

South Africa: +27 82 447 4256

Australia: +61 402 048 326

E-mail: amra@amcrobertandassocs.com.au