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M&A Due Diligence: Consideration of Fraudulent Financial Statements
Author(s) -
McGee Jo Ann,
Byington J. Ralph
Publication year - 2015
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22117
Subject(s) - due diligence , diligence , business , accounting , finance , actuarial science , psychology , social psychology
Merger and acquisition (M&A) deals help companies grow quickly (Whitchelo, 2015). However, these types of deals do not come without risks. Corporate management should be aware that when they are conducting M&A due diligence, they should exercise caution in regards to the existence of fraudulent financial statements (FFSs) because of the severe consequences related to FFS. The purpose of this article is to familiarize corporate management with the common fraud schemes employed to create FFS and the red flags that signal the potential existence of these schemes. © 2016 Wiley Periodicals, Inc.