ET Prime Special Series - The Red Flags: When assets betray trust. How investors should read the ‘receivables’

In the previous part, we learnt about how sometimes profits shown in financial statements may be inflated sales figures supported by fake receivables. In this part (Part 8), we will take a closer look at such cases and understand how these actually unfold in real life and how they suddenly come to light. We will look at real-life examples of how auditors responded to these situations as well as instances where it came to light even after the statutory auditor failed to detect it. More importantly, we will focus on what investors can learn from these failures and how they can be equipped to find early indicators and ask the company important questions.