TurskeyM_M3_A4 - Michael Turskey Argosy University B6450...

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Michael Turskey Argosy University B6450 – Financial Strategies for Managers Dr. Adam Sullivan March 23, 2010 Revenue Recognition Issues
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The symptoms of revenue recognition problems show up in financial statements. For a while, the revenue recognition line says one thing, but a few months later--whoops!--a restatement rolls out a different figure. Now, most of those "whoopses" are born of innocent error, but many are evidence of fraud. Fraud or goof, it hurts. Restatements are to financial officers what fumbles are to quarterbacks. They're not only embarrassing to the CFO but expensive for the company and startling for shareholders, who can't help but wonder whether the restatement is a case of accounting confusion or unveiled shenanigans. Revenue "mis-recognition" is the leading cause of restatement, and the rate of restatements has been soaring. In 2005, there were 1,295 restatements, according to a Glass, Lewis & Co. study--one for every 12 public companies registered in the U.S. That's almost twice the 2004 number and three times the number in 2002. In fact, the study found from 1997 to 2005,
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TurskeyM_M3_A4 - Michael Turskey Argosy University B6450...

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