How balance sheet and financials gets fudged, what protections are?
Worldcom, Enron and Satyam primarily fudged their balance sheets. Most popular ways are: Off Balance Sheet Items: Creating a subsidiary company to house variety of expenses and liabilitlies. Due to separate entity, these remain hidden from investors. accelerating income: Recognizing revenue on current basis whereas the actual revenue is to recognized over the years. Micro expenses: It is a popular trick in small corporations. Noone seems to care about these though. Adjusting Depreciation: A company can inflate its B/S income by charging less depreciation by increasing life or using less rate of depn.