Detecting Accounting Fraud 1st Edition by Cecil Jackson

Exercise 14

Issuers of financial statements that fail to disclose that accounts receivable have been sold or factored sometimes attempt to offer the defense that this is only a disclosure issue that does not affect earnings. If the nondisclosure of the sale of accounts receivable does not affect earnings, does this reduce the responsibility of management to properly disclose the sale of accounts receivable? Give reasons for your answer.