Learn how to “get behind” the numbers and recognize “red flags” during this highly acclaimed forensic accounting seminar. To avoid future losses, analysts must understand how financial reporting options affect income, assets, cash-flow forecasts, financial ratios, and trends—and distinguish between accounting rules and underlying economic realities.
This advanced, sequential two-part program focuses on pragmatic implications of corporate disclosures (and non-disclosures), using critical analyses of financial reporting numbers and comprehensive lending and equity valuation case analyses as a basis for improved risk assessment and cash-flow forecasting.
Part I incorporates the latest financial reporting developments and includes coverage of middle-market firms, with classes stressing earnings sustainability and its linkage to future cash flows. Part II applies the methodology to new situations and economic circumstances.
The two parts are sequential. You must complete Part I before enrolling in Part II. You will benefit from taking both parts consecutively.
During this course, you will:
- Distinguish between accounting rules and underlying economic realities
- Use critical analyses of financial reporting numbers as a basis for improved risk assessment and cash-flow forecasting
- Utilize a time-proven methodology of financial analysis that seeks economic facts
- Understand the limitations of financial data in order to generate improved comparisons across firms and to make better credit and equity investment decisions
- Draw upon lessons learned from recent corporate accounting scandals
- Receive the book Financial Reporting & Analysis, the leading text on the subject, written by two of the faculty
Discussion, case analysis, and group exercises facilitate participation in the seminar. In the evenings, participants work in study groups to prepare exercises and projects for class discussion.
This program consists of two parts. Some of the topics covered in the program include:
- Earnings Sustainability and Cash Flow Analysis
Sustainable and unsustainable earnings; implications for risk assessment; relationship of earnings sustainability to value and strategy; linking sustainability and cash flow; recognizing early danger signals
- Earnings, Cash Flow, and Firm Valuation
Alternative valuation approaches; valuation analysis to assess credit risk; do reporting alternatives affect valuation?; recognizing (and adjusting for) reporting strategies
- Recognizing and Repairing Accounting "Cosmetics"
Leases and other off-balance sheet devices; how lease capitalization alters statements, ratios, and loan covenant compliance; special-purpose entities and joint ventures; other “red flags”
Revenue recognition “games”; LIFO abuses; changing accounting principles
Devices used to “cook the books”; customers’ motivations; “forensic accounting”; sales of receivables; new earnings management devices; how to find the clues and adjust
- New Perspectives on Cash Flow Forecasting
Earnings persistence; quality of earnings analysis; acquisitions and time-series distortions; cash flows and restructuring
- Taxes, Cash Flows, and Financial Statement Effects
Deciphering income tax disclosures: the forensic accountant’s best tool; recognizing financial reporting “irregularities”; using tax disclosures to enhance inter-firm comparability; deferred income tax reversals
- Pensions and Post-Retirement Benefits
SFAS Nos. 87 and 132 (revised 2003): understanding the pension disclosures and using them to improve cash flow forecasts and assess the risks of PBGC intervention; SFAS
No. 106: post-retirement benefits other than pensions; covenant effects and future cash-flow implications
- Using Financial Reporting Strategically
Lender and equity analyst as targets; adroitly timed reporting changes; subtly altering trends; protecting yourself from misleading disclosures
- Recent Developments
SFAS Nos. 133 and 138: derivatives and hedging; SFAS No. 140: transfers of financial assets; SFAS Nos. 141 and 142: business combinations and goodwill; SFAS No. 154: accounting changes and error corrections
Many companies find it especially helpful to sponsor a team of participants to the program. Attending as a team produces a shared vocabulary and learning experience that encourages the application of new concepts and ideas to company issues. Special study groups, pricing and other arrangements are available to companies sponsoring teams of at least four participants. Please contact us to learn more.
Program taught in: