USC Marshall

The securitization of tradreceivables is a multi billion-dollar sector, and it is growing. Accounting Standards Update ASU 2016-5, Statement of Cash Flows, included a change in the reporting of cash receipts from the securitization of accounts receivable. It requires that cash receipts from payments on a transferor’s beneficial interest in securitized receivables must be classified as cash flows from investing activities. Importantly, and for very good reason, investors generally regard cash inflows from operating activities more highly than cash inflows from investing activities. This article argues that these cash flows should be reported as cash flows from operating activities.

Op-Ed Article:

Sarbanes-Oxley, or SOX as it is known, is certainly not perfect. Its requirements for stringent internal controls need to be lightened, and its cost is proving prohibitive for some smaller companies. However, it is an understandable response to the threats facing our economy. On the other hand, there is danger in assuming that SOX or any other regulation can stamp out fraud entirely.

Business Fairy Tales

Book Description

On the heels of the Enron trial, there are many lessons to be learned from the barrage of fraud hammering corporate America—including how to spot signs of future scams. In a gripping read, Business Fairy Tales, by Cecil W. Jackson, uses real-world scandals to illustrate the top-twenty methods used by companies to falsely overstate earnings and hide debt. The book explains each accounting trick with the story of a company and the officials responsible for the fictitious financial reporting. It goes behind the scenes to describe the deception, and to examine the character failures of the leaders. The book also presents a compelling argument for the kind of reform needed, as well as the ethics that must support true reform. Ultimately, it equips and empowers readers with the skills to spot signs of potential accounting fraud. The book provides specific, tell-tale signals of the top twenty financial-reporting schemes—signals that are inevitably left behind in false financial statements.

What the Critics are Saying

"Jackson walks the reader through the various ways unsuspecting investors can be led down the garden path through accounting tricks…Jackson has a knack for bringing complicated financial concepts like goodwill down to earth, and for demonstrating how they can be used to inflate earnings." Barron’s Magazine, Sept. 25, 2006

"The ’fairy tales’ of the title are the companies’ financial reporting, which is described in what reads like a series of horror stories. The Grimm-style moral is obvious, but author Cecil W. Jackson goes further, equipping the reader with the skills to spot the 20 most common forms of corporate impropriety, and hopefully avoid this kind of nightmare in the future." Accounting Today, Oct. 2, 2006

“There are many more lessons in this book. They are based on real cases, and the author does an excellent job in providing ways to detect possible mischief. And, as a book that can help me avoid trouble with my investment picks, it's certainly a bargain.” Tom Taulli, The Motley Fool, Oct. 31, 2006