Improper disclosures

Financial statements omit or misstate required disclosures: liability omissions, subsequent events, related-party transactions, accounting changes, and management fraud. This scheme is assessed by document review and inquiry, not by analytics on transaction data.

Not testable with data. This scheme is assessed through disclosures review and examiner judgment rather than automated analysis.

Starter pack: Not part of a starter pack

Red flags

In the data

Behavioral

• Management limits auditor access to legal counsel or board minutes
• Undisclosed business interests of officers

Internal controls

• No process to identify related parties and subsequent events