The balance sheet doesn’t get enough attention in forensics.
Business perks can be disguised as assets. Income can be disguised as a liability. I once even heard of a guy who booked his kid's wedding to fixed assets.
This is because the only difference between an income statement item vs. a balance sheet item is whether the person recording the transaction offset the change in cash in the accounting system with a balance sheet account or income statement account.
Balance sheet manipulation is a fraudster favorite since it is a way to take cash or hide income without impacting profit and loss.
At Accounting & Valuation LLC, we review the balance sheet in conjunction with income statement to see where the cash went.
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