EXAMPLES OF ILLEGAL ACCOUNTING MANIPULATIONS TO INCREASE OR REDUCE ASSETS

  Increases of Assets Reductions of Assets
Noncurrent Assets
  • Incorporate inexistent assets (work in progress, goodwill, etc.)
  • Activate expenses fraudulently
  • Increase fictitiously the value of noncurrent assets
  • Amortize (or make provisions or deteriorate) noncurrent assets less than prescribed by the regulation
  • Excess deferred tax assets in a company with many losses
  • Hide noncurrent assets
  • Reduce fictitiously the value of noncurrent assets
  • Amortize (or make provisions or deteriorate) noncurrent assets more than prescribed by the regulation
Financial Investments
  • Inventing financial investments
  • Mark down financial investments less than prescribed by the regulation
  • Use of difficult-to-understand derivative financial instruments to hide fraud
  • Hide financial investments
  • Mark up financial investments prescribed by the regulation
  • Use of difficult-to-understand derivative financial instruments to hide fraud
Inventory
  • Invent physical units of inventory
  • Increase fictitiously the unit price of inventories
  • Hide physical units of inventory
  • Fictitious reduction of the unit price of inventories
Customers
  • Invent customer balances
  • Fraudulently reduce defaulting
  • Hide customer balances
  • Fraudulently increase defaulting
Other Debits
  • Invent debit balances
  • Hide debit balances

EXAMPLES OF ILLEGAL ACCOUNTING MANIPULATIONS TO INCREASE OR REDUCE DEBTS

  Increases of Assets Reductions of Assets
Loans and Credits
  • Inventing debts with partners or with other creditors
  • Hide debts with partners or with other creditors
Provisions
  • Post fictitious provisions
  • Hide provisions
Pension Plans
  • Increase pension debt beyond what the regulation allows
  • Illegally hide or reduce pension debt
Suppliers
  • Inventing debts with suppliers
  • Hide debts with providers
Other Debits
  • Inventing debts
  • Consolidate subsidiaries by the global integration method without requirements for this
  • Hide debts
  • Not consolidate subsidiaries despite being obliged to do so
 
  • Use of difficult-to-understand derivative financial instruments to hide fraud
    		• Use of difficult-to-understand derivative financial instruments to hide frauds

    EXAMPLES OF ILLEGAL ACCOUNTING MANIPULATIONS TO INCREASE OR REDUCE PROFITS

      Increases of Assets Reductions of Assets
    Income
    • Fictitious income
    • Post deposits as if they were sales
    • Sales at prices above the market price in order to deceive with companies that don’t consolidate, with companies in tax havens or screen companies
    • Transfer reserves to income
    • Hide income and not post them
    • Post sales as if they were deposits
    • Sales at prices lower than prices outside the market in order to deceive with companies that don’t consolidate, with companies in tax havens or screen companies
    Consumptions
    • Stop accounting for consumptions
    • Expenses at prices below market price in order to deceive companies that
      don’t consolidate or with companies in tax havens
    • Fictitious consumptions
    • Expenses at prices above market price in order to deceive companies that don’t consolidate or with companies in tax havens.
    Depreciations
    • Fraudulently reduce depreciations
    • Fraudulently increase depreciations
    Other expenses
    • Account for expenses charged to reserves instead of including them in the income statement
    • Hide expenses
    • Fraudulently account for expenses as investments
    • Expenses at prices below the market price in order to deceive with companies that don’t consolidate or with companies in tax havens
    • Invent expenses
    • Fraudulently account for investments as expenses
    • Expenses at prices above the market price in order to deceive with companies that don’t consolidate or with companies in tax havens
    Provisions
    • Fraudulently reduce provisions
    • Fraudulently increase provisions
    Impairment of assets
    • Fraudulently reduce impairments
    • Fraudulently increase impairments
    Financial Income and Financial Expenses
    • Incorrectly assessing the results generated in financial instruments or other assets (to transfer results from one year to another)
    • Incorrectly assessing the results generated in financial instruments or other assets (to transfer results from one year to another)
     
    • Hide financial expenses
    • Use of difficult-to-understand derivative financial instruments to hide fraud
    • Hide financial expenses
    • Use of difficult-to-understand derivative financial instruments to hide fraud
    Results from Subsidiaries
    • Inflate profits from investees
    • Invest losses from investees