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6 million behind one dealer’s freshly plastered walls in his home. Conclusion Thomas Ray, chief auditor of the Public Company Accounting Oversight Board (PCAOB), says that a large number of financial frauds are accomplished by simply booking late entries. “It’s the easiest way to commit fraud. , cooked the books for four years, overstating profits by $50 million without Price Waterhouse Coopers’ knowledge. Just as termites never sleep, fraud never sleeps, and just like termites, fraud can destroy the foundation of an entity.

Indicated that between 200 and 500 publicly traded companies listed in the United States, 3 or about 5 to 12 percent of the total, have to restate their earnings each year. Some motivations for fraudulent behavior are meeting external or internal expectations, concealing bad performance, preparing for a debt/equity offering, improving management compensation (for example, through stock options), and covering up fraud. Abusive earnings management would include the following: • Improper revenue recognition (such as bill and hold sales) • Improper expense recognition • Using reserves to inflate earnings in years with falling revenues (cookie-jar accounting) • Shifting debt to a special-purpose entity (SPE) • Channel stuffing • Capitalizing rather than expensing marketing costs • Extending useful lives and inflating salvage values • Accelerating revenue from leasing equipment • SPEs that are not consolidated Early warning signs of earnings management include the following: • Cash flows that are not correlated with earnings • Receivables that are not correlated with revenues • Allowances for uncollectible accounts that are not correlated with receivables • Reserves that are not correlated with balancesheet items • Acquisitions with no apparent business purpose • Earnings that consistently and precisely meet analyst’s expectations The 2010 COSO fraud report indicates that revenue recognition schemes are used 61 percent of the time to cook the books, followed by overstating assets (51 percent), understatement of expenses and liabilities (31 percent), and misappropriation of assets (14 percent).

Another example is the United States War Crimes Act, which codifies several instruments of international law. Section 2441 of Title 18 of the United States Code 10 Adjudicating International Crimes proscribes crimes against humanity, genocide, and grave breaches of the Geneva Conventions of 1949. Other examples of national prosecutions related to international crime include Article 101 of the UN Convention on the Law of the Sea, which defines acts of piracy on the high seas, including theft, hostage taking, and other acts of violence or depredation.