Detecting manipulation

Accounting quality teaches you that a reported figure is an allocation, made by an interested party, that has to reverse. This course is the same subject with the companies named.

Every case in it is one where the Securities and Exchange Commission brought a public enforcement action that the respondent settled, or where the company itself filed a restatement. Each lesson states what the order or the filing says, names the release number and the date, and stops there. No adjective about any person appears anywhere in this course, no open matter is discussed, and nothing here says or implies anything about any company that is not named in an action.

That restraint is not decoration. It is the difference between teaching forensics and making an accusation, and the line is easy to cross by accident.

The structure is five families. Revenue that has not arrived yet. Costs that moved out of their period. Cash flow relocated between the three sections of one statement. A measure the company defined itself. And a comparison a transaction reset. Each family gets a lesson, each lesson names the specific disclosure that would have shown it, and the last two lessons deal with what happens after a restatement and with how often a detection method is wrong.

You need accounting-quality first. probability-for-investors helps for the final lesson, which is arithmetic about false positives rather than about accounting.

What you will be able to do

Put a suspicious figure into one of five families. Name the disclosure that would reveal it. Read a restatement and say what was restated, over which periods, and by how much. And state the false-positive problem attached to whatever detection method you just used, in numbers.