Effective Learning Strategies Forum - Poster Sessions
Wednesday, August 6, 10:00 AM - 11:30 AM

15. Looking for Revenue in All the Wrong Places: An Analysis of Recent Revenue Recognition
Presenters: M. Elizabeth Haywood, Rider University
Dorothy A. McMullen, Rider University

Description: A day does not go by that yet another company is being accused of corporate fraud and that its auditor was blind in detecting it. The public outcry over fraudulent financial reporting has called into question the credibility and integrity of the auditing profession. The purpose of this paper is to help students examine where and why misstatements in revenue recognition occurred in recent years. This paper focuses on revenue because it represents the largest number on the income statement and because 70 percent of the SEC Enforcement Cases involve some type of revenue recognition problem. Furthermore, the recently released SAS No. 99, Consideration of Fraud in a Financial Statement Audit, specifically refers to revenue as a problem area. The authors reviewed Wall Street Journal articles in 2002 as well as 2002 SEC Litigation Releases and Administrative Proceedings. This paper summarizes breaches in revenue recognition by audit objective, documents trends in these misstatements, and offers a variety of teaching methods to present this topic.

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