Includes bibliographical references and indexes.

Financial Numbers Game -- Rewards of the Game -- Classifying Creative Accounting Practices -- How the Game Is Played -- Accounting Policy Choice and Application -- Fraudulent Financial Reporting -- Cleaning Up after the Game -- Earnings Management: A Closer Look -- What Is Earnings Management? -- Incentives and Conditions for Earnings Management -- Earnings Management Techniques -- Evidence of Earnings Management -- Effectiveness of Earnings Management -- Is Earnings Management Good or Bad? -- The SEC Responds -- The Chairman's Speech -- The Action Plan -- Subsequent Developments -- Enforcing the Securities Laws -- Financial Professionals Speak Out -- Survey of Financial Professionals -- Survey Results -- Recognizing Premature or Fictitious Revenue -- Is It Premature or Fictitious Revenue? -- When Should Revenue Be Recognized? -- Detecting Premature or Fictitious Revenue -- Checklist to Detect Premature or Fictitious Revenue -- Aggressive Capitalization and Extended Amortization Policies -- Cost Capitalization -- Detecting Aggressive Cost Capitalization Policies -- Amortizing Capitalized Costs -- Detecting Extended Amortization Periods -- Checklist to Detect Aggressive Capitalization and Extended Amortization Policies -- Misreported Assets and Liabilities -- Link with Reported Earnings -- Boosting Shareholders' Equity -- Overvalued Assets -- Undervalued Liabilities -- Checklist to Detect Misreported Assets and Liabilities -- Getting Creative with the Income Statement: Classification and Disclosure -- Current Income Statement Requirements and Practices -- Reporting Comprehensive Income -- Creative Income Statement Classifications -- Creativity with Other Aspects of the Income Statement -- Getting Creative with the Income Statement: Pro-Forma Measures of Earnings -- Recasting the Bottom Line: Pro-Forma Earnings Measures -- Problems with Cash Flow Reporting -- Reporting Cash Flow -- Problems with Reported Operating Cash Flow -- Using Operating Cash Flow to Detect Creative Accounting Practices -- Checklist for Using Operating Cash Flow to Detect Creative Accounting Practices.

To hide falling profits, some managers ply the flexibility found in accounting principles to alter their financial reports. Others go further and use fraud in their deception. It is vitally important that investors, analysts, and other users of financial statements detect these creative accounting practices as early as possible in order to avoid negative earnings surprises and potential share-price declines. The Financial Numbers Game identifies the steps businesses may take to misstate financial performance and helps its readers to identify those situations where reported results may not be what they seem.

Authors Mulford and Comiskey also describe the flexibility built into the GAAP principles and discuss ways companies can take advantage of that flexibility while remaining within the rules of proper reporting. The role of the SEC in enforcing securities laws is explored, as are the specific statutes the SEC uses to prosecute those it deems to have gone too far. The authors present the results of a survey of important financial professionals on their views of the propriety of many financial reporting practices and on the steps they use to detect creative accounting practices. This survey shows a wide range of opinions on what is allowable and the best methods for detecting what is not allowable.

The Financial Numbers Game presents an expert analysis of creative accounting procedures The Financial Numbers Game offers all users of financial statements a comprehensive resource for understanding, detecting, and avoiding the vast assortment of creative accounting techniques found in practice today.