Search Site
Menu

The Most Common Methods Companies Use to “Cook the Books”

Whistleblowers often are workers at companies who become aware of their company’s inappropriate or fraudulent practices. They might attempt to report their concerns internally only to be rebuffed and be forced to make their reports at a higher level.

Here are a few examples of some of the behaviors by companies that are most likely to become the subjects of whistleblower complaints.

  • Improper revenue recognition: More than 60 percent of enforcement actions by the SEC relate to revenue recognition and improper timing of it. Revenue should only be recognized after it is earned and realized. Companies might attempt to accelerate revenue recognition so they meet earnings goals, or delay revenue recognition if they have met their revenue goals for a period.

  • Fictitious revenue: In such a scheme, companies falsely inflate their earnings for a certain period by recognizing revenue that did not actually occur. They might make up fake contracts or report sales that never happened. This happens at all scales of business, even amid some of the largest companies in the world.

  • Third-party transactions: Companies may improperly recognize revenue through fraudulent or improper third-party transactions. These are most likely to include consignment sales, bill and hold sales and various types of contingency sales.

  • Fraudulent management estimates: Management at a company may inappropriately adjust and then inaccurately report accounting estimates for the company to more favorably impact certain financial statements.

  • Improper expense capitalization: Companies must properly classify the costs of expenditures as assets or expenses. Improper capitalization involves misclassification for fraudulent purposes.

Aware of any of these or other examples of financial impropriety in your organization? Contact an experienced whistleblower attorney at Kardell Law Group to discuss your potential legal case.

Awards & Honors
Our Office
  • Dallas Office
    4514 Cole Ave
    #600
    Dallas, Texas 75205
    Phone: 214-306-8045
    Fax: 469-729-9926
As Seen In
In his new book, "Standing Up to China: How a Whistleblower Risked Everything for His Country," former client & Author, Ashley Yablon, quotes Attorney Steve Kardell about Whistelblower Law.
Testimonials
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Incredible knowledge of employee related concerns and equally brilliant knowledge of health care regulations, standards of practice. I would recommend this firm to anyone."  -V.B.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

  • "Never thought my career would end like it did after 30 years of service. I was part of the first round of the so called reduction of force. I asked myself how can I be part of this with 30 years of seniority. How did they pick these 90 plus employees? Now, the culture of this organization made you question every decision they made. It wasn’t what you knew it’s was a culture of who you know. Nonetheless, I did not accept their severance package. I immediately starting looking for an attorney who would take on my case. After the initial call to Steve I had hope again. He was open and honest about everything and reassured me he would do his best for me, and he did. I had an awesome outcome. Thanks Steve you’re the best."  -S.S.