Accounting journal entries can be a red flag of fraud

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Accounting journal entries can be a red flag of fraud

Today I came across this article by Staffing Industry Analysts:

Barrett terminates CFO, will restate some past earnings

Barrett Business Services Inc. (NASD: BBSI) terminated CFO James Miller on March 3 after he informed the company’s audit and compliance committee that he made unsupported journal entries in the company’s financial records during each calendar quarter of 2013, the company announced. In addition, Barrett will restate results for the second and third quarters of 2014. Read More

It reminds me of how I am always on the lookout for journal entries when performing forensic accounting engagements.  My review of journal entries started long ago as I began my career in public accounting.  Reviewing unusual and significant journal entries and other adjustments is an audit procedure frequently performed during audits of financial statements.  Because journal entries can be used to hide fraudulent transactions or as a method to execute a fraud scheme, they are always on my radar screen.

The Forensic Lady
The Forensic Lady
For over 20 years Pam Wickes, CPA, CFE, CFF, ABV has provided diversified accounting services. Since 2004, Pam’s services have been focused in the niche area of forensic accounting and she has been retained in a wide variety of litigation involving financial matters and disputes, as well as other critical business matters.