Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition
From the “ Sherlock Holmes of Accounting,” the tools you need to stay a step ahead of the crooks “Howard Schilit is the authority on forensic accounting. Financial Shenanigans is invaluable reading for market participants seeking t The above is the description for Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition
Customer Reviews
33 of 33 people found the following review helpful
Great Book, but Important Sections of Second Edition Dropped, February 1, 2011
This review is from: Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition (Hardcover)
I should begin by saying that I completely agree with the previous five star reviews. This is a magnificent book, and the second edition had a great influence on my investing. All serious investors should read this. I would like to draw attention though, to the changes made since the second edition. The second edition described seven basic shenanigans which, for the most part, manipulated earnings and revenue, as these are the headline numbers that the bulk of investors look at. The third edition covers the same shenanigans, though the sections have been re-written, and the examples have been changed and updated. The third edition adds sections on shenanigans to manipulate cash flow numbers (yes, this can be done) and metrics that investors use frequently. The new sections are worth the upgrade to me, though if you read widely in the area, you won't find much new. Mulford and Comiskey's Creative Cash Flow Reporting, for example, covers the same material as the section on cash flow. Those who haven't read the second edition should be aware that portions of the second edition have been eliminated. The sections on "Problem Areas" and "Looking Back . . . Looking Forward" are gone, but the topics they deal with have either been absorbed into the rest of the text or can be dropped without great consequence. The section on "Techniques for Detecting Shenanigans" has also been dropped, and I believe that this is unfortunate. While some readers may already be familiar with common-size analysis, for example, many investors don't have formal education in accounting and could use the explanation and examples. It was this chapter of the second edition that promped me to create common-size balance sheets and income statements for all potential investments, and I've found the exercise invaluable, both for detection of possible shenanigans and for general understanding the companies I'm researching. If you are new to this area of stock analysis, or new to accounting, I would recommend buying both the second and third editions. The second edition should be cheap, as used copies of older editions are not usually in high demand. The third edition gives investors more to look out for, but without a systematic way to apply the techniques, I doubt many will put their new found knowledge to good use.
Help other customers find the most helpful reviews
This review is from: Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition (Hardcover)
As a financial accountant, I have special appreciation for "Financial Shenanigans" by Schilit and Perler. Like the preface mentions, this book truly provides the "post-mortem analysis" it promises. It clearly narrates the most infamous financial reporting failures in history (US, Europe, & Asia), and the lessons such fraudulent mistakes offer those who wish to learn. Not only does it serve as a quick reference for all possible fraudulent methods to date, but also as a review of core financial accounting principles (US GAAP) and basic performance ratio calculations.
In addition, it is intelligently written, and easy to follow and comprehend. More specifically, it also employs humor in a smart, witty manner. It does a great job of drawing in readers who appreciate reading up-to-date, practical accounting/finance material they can apply to their professions (outside of academia). Best of all, it isn't dry, but engaging!
I expect my copy will become worn and dog-eared within a short period of time, as this book has become my most trusted coworker and best companion at the office. I am looking forward to following these two authors and reading more of their upcoming work.
My personal opinion, of course, but perhaps more MBA's and senior executives ought to read this book and educate themselves! We're on to you, C-suite!
Brilliant, useful, and insightful! Well done! 10 out of five stars!
Help other customers find the most helpful reviews
This review is from: Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition (Hardcover)
One of the best books I have ever read. This book provides you with all the defenses to protect against agressive and fraudulent accounting. Most interesting part was to learn how easily management can manipulate CFFO. It has been traditionally believed that this number is reliable because it is harder to manipulate, in fact analysts don't even check its quality like they do for earnings. Skepticism is a powerful tool.
Help other customers find the most helpful reviews
