The Balance Sheet Doesn't Get Enough Attention in Forensics

The balance sheet doesn’t get enough attention in forensics.

Business perks can be disguised as assets. Income can be disguised as a liability. I once even heard of a guy who booked his kid's wedding to fixed assets.

This is because the only difference between an income statement item vs. a balance sheet item is whether the person recording the transaction offset the change in cash in the accounting system with a balance sheet account or income statement account.

Balance sheet manipulation is a fraudster favorite since it is a way to take cash or hide income without impacting profit and loss.

At Soman Forensic & Valuation CPAs, we review the balance sheet in conjunction with income statement to see where the cash went.