The types of financial statements fraud include:
- Revenue-related fraud (recognizing revenue before it is earned)
- Expense-related fraud (improper capitalization; the red flag would be managements' obsession with selection of accounting policies)
- Liability related fraud (concealing of liabilities by not recording them)
- Asset-related fraud (skimming of cash receipts, forging of company cheques, pilferage of inventory and misuse of PPE)
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