Hello Class, Individuals that commit financial statement fraud can do so in multiple ways. At the highest level, fraud falls into three major categories: manipulation, misrepresentation, and misapplication.Although they only make up a small portion of fraud schemes, false financial statements have a significant negative economic impact on employees and investors (Crumbley et al., 2017). Top corporate executives frequently know of and may even support these schemes. One type of fraud that falls into the misrepresentation category is the overstatement of revenues and assets. Overstated revenues can give the impression that a company is performing better than it is. Fraudsters can do this in multiple ways, such as manipulating inventory valuations. DGSE Companies, Inc is one company that used this type of financial statement fraud. DGSE is a Dallas-based jewelry and collectibles company that buys and sells jewelry, diamonds, fine watches, rare coins, precious metals, and other collectibles.The SEC alleges that John Benson, their former CFO, made repeated false accounting entries that materially inflated the value of inventory on the balance sheets (SEC, 2017). Benson's entries gave the impression that DGSE owned some inventory when in reality those items still belonged to clients who had contracted for DGSE to hold goods on their behalf until they were sold. After Benson misled the company's independent auditors regarding the journal entries, the inventory was overstated in public filings made in 2009, 2010, and 2011 by a range of 99.1% to 227.4% (SEC, 2017). Reference: Crumbley, D. L, Fenton, E. D., Smith, G. S., & Heitger, L.E. (2017).Forensic and investigative accounting(8th ed.). CCH. SEC (2014, May).SEC Charges Former CFO of Dallas-Based Jewelry and Collectibles Company With Accounting Fraud[Press release]. https://www.scribbr.com/apa-examples/press- release/
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