What could the CFO do to investigate the potential problems in the procurement department of Bucket Corporation?
Do you think it is possible there is fraud involved? Why or why not?
2- 2- Large frauds can often be detected by performing financial statement analysis. Although such analysis can raise areas of concern, not all red flags are the result of fraudulent activities. Reasonable explanations often exist for anomalies in financial statements.
The statement of cash flows is one financial statement that is analyzed in order to identify possible fraud. Please refer to the statement of class flows for Kelly Enterprises, Inc. in our text (Chapter 6 Short case 10).
What possible red flags can you identify?