Hidden Financial Risk: Understanding Off-Balance Sheet Accounting

An insider's guide to understanding and eliminating accounting fraud
How do these high-profile accounting scandals occur and what could have been done to prevent them. Hidden Financial Risk fills that void by examining methods for off balance sheet accounting, with a particular emphasis on special purpose entities (SPE), the accounting ruse of choice at Enron and other beleaguered companies. J. Edward Ketz identifies the incentives for managers to deceive investors and creditors about financial risk and also shows investors how to protect their investments in a world filled with accounting and auditing frauds.
J. Edward Ketz, PhD (State College, PA) is MBA Faculty Director and Associate Professor of Accounting at Penn State's Smeal College of Business. He has been cited in the press nearly 300 times since Enron's bankruptcy, including The New York Times, The Wall Street Journal, and The Washington Post.. He has a regular column in Accounting Today.

Preface.

PART I. MY INVESTMENTS WENT OUCH!

1. What? Another Accounting Scandal?

2. Balance Sheet Woes.

PART II. HIDING FINANCIAL RISK.

3. How to Hide Debt with the Equity Method.

4. How to Hide Debt with Lease Accounting.

5. How to Hide Debt with Pension Accounting.

6. How to Hide Debt with Special Purpose Entities.

PART III. FAILURES THAT LED TO DECEPTIONS.

7. The Failure of Managers and Directors.

8. The Failure of the Auditing Profession.

9. The Failure of Regulation.

10. The Failure of Investors.

PART IV. MAKING FINANCIAL REPORTS CREDIBLE.

Chapter 11. Andersen Has the Solution--Really!

Bibliography.

Index.

"Ketz discussion is fascinating, although all too useful to future scamsters wanting to find out just how those clever guys at Enron did it." ( UPI Business and Economics , August 11, 2003)