Colleen Cross's Blog, page 10

Win a Signed Copy of Exit Strategy

Exit Strategy is now available in Paperback!

To celebrate, I'm giving away an autographed copy of Exit Strategy on Goodreads. To enter, check out the link below, and good luck!

You can also download a sample or buy the paperback/ebook at Amazon.com here.
The ebook is a steal at $2.99, and just a click away at all ebook retailers including:
Amazon UK
Kobo
Barnes & Noble
Smashwords
iTunes


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Goodreads Book Giveaway Exit Strategy by Colleen Cross Giveaway ends February 29, 2012.
See the giveaway details at Goodreads. Enter to win

Famous Frauds - WorldCom

WorldCom may have crashed and burned a decade ago, but it still remains one of the biggest accounting frauds in history. Could it have been detected or stopped sooner? Yes. There were a number of red flags, and many people knew enough to blow the whistle.

MCI WorldCom was formed in the then-largest merger in US history, giving AT&T some serious competition in the telecom sector.  Earlier mergers and acquisitions by CEO Bernie Ebbers had transformed a small, regional long distance company into an international telecom giant. 

But there were signs something wasn't right. WorldCom's revenues and profits kept growing, despite a downturn in the telecom sector as businesses slashed spending. How did WorldCom fare so well when everyone else was suffering? It didn't, once a $4 billion financial statement fraud was uncovered in the financial statements.

Financial statements provide a snapshot of a company's performance. Revenues and expenses on those statements are measured and classified according to specific, well-defined accounting criteria.  In WorldCom's case, this didn't happen.

WorldCom recorded customer interconnection costs as an asset, rather than the expense it really was. The customer connection cost is mostly the labor involved to connect the customer to the utility's infrastructure. If those customers walk away, you can't resell that labor cost to someone else. Yet WorldCom assigned an asset value to it, recording it just like real estate, vehicles or any other investment on the company balance sheet.

Not only did that overstate the company's assets, it also meant that expenses that should have been offset against the sales weren't.  The company appeared more profitable than it was.

In WorldCom's case, there were warning signs of an underlying problem:
Outperforming the competition despite a business sector downturn.Agressive growth strategies (these often can drive agressive, or even fraudulent accounting treatments)Management loans (some to cover margin calls on WorldCom stock losses)Management heavily invested in the stock - big personal impacts if the stock price dropped The last two points are major conflicts of interest, and likely contributed to the first two scenarios happening in the first place. I'll talk more about those in a future post.

If you're investing, make sure you check out the company's financial statements. If you don't read them and understand them, you shouldn't be investing. Never invest in something you don't understand, and never blindly follow the crowd.

Read more about fraud and forensic accounting at http://colleencross.com
Colleen is the author of Exit Strategy, a Katerina Carter suspense thriller available at Amazon.com here or Amazon.co.uk here.

Crime Writer Spotlight - Sandra Nikolai

My guest blogger today is mystery author Sandra Nikolai. Her novels teem with deception and murder. Fun in fiction, but the real-life trickery she experienced can have serious consequences.
Sandra, tell us about your personal experience with the Nigerian letter scam.
My retired aunt loves exchanging e-mails with friends. One day an unusual message popped up in her inbox. It was from a Nigerian doctor and looked quite authentic. The doctor asked for her help in retrieving millions of dollars illegally trapped in a bank account overseas. The account was in the name of his terminally ill patient—a woman who apparently had been good friends with my aunt years ago. The doctor requested a preliminary deposit to cover expenses so the deal could proceed. He stated that my aunt would be compensated for her trouble with 10% of the sum held in the overseas bank account.
How did your aunt deal with it?
She couldn't recall the woman but figured her memory wasn't what it used to be. Since my aunt devotes a lot of time to volunteer work, she wasn't about to let an old friend down. She was preparing to send the doctor the details of her bank account and credit card by return e-mail when I happened to call. After she told me about her "old friend," I explained that the money doesn't exist and put a stop to the scam immediately.
Sandra did exactly the right thing, and her aunt is lucky to have talked to her. This scam existed in various forms for centuries. The Spanish Prisoner, 419 Fraud, and the Nigerian letter scam are variations of the same scam. All involve an upfront payment with the promise of a large commission in return. Victims never see their money again.
Red flags:
Unsolicited requests for money. If you didn't initiate contact with s omeone, don't respond.Asking for your bank details. Never divulge your bank information to anyone. At best, you will never see your money again. Worst case, they will also steal your identity.A sense of urgency. This is designed to make you act before you have time to think.
Look for False Impressions, Sandra Nikolai's upcoming novel (Spring 2012), in which ghostwriter Megan Scott and investigative reporter Michael Elliott become prime suspects in the murder of Megan's husband and his mistress. Visit Sandra at: www.sandranikolai.com or follow her blog at: http://sandranikolaiauthor.blogspot.c... is a member of the Crime Writers of Canada and Capital Crime Writers.
Find more on fraud at http://colleencross.com/

Financial Statement Red Flags

Some things are too good to be true. In the case of financial statement fraud, here are some tips.  There may be perfectly valid reasons for the items below, but they can also signal fraud.  The biggest sign of all is "sudden", as you will see below.
A wise investor will look twice before investing, and/or ask more questions if s/he already own the stock:
Sudden reversal of fortunes (higher profits, sales, etc).  Maybe it's a legitimate turnaround, but these things usually don't happen overnight.  Frauds often start with aggressive accounting practices.

Sudden increases in sales, particularly near a company's quarter or year-end. Are they legitimate, or is management trying to "make the numbers" expected from the investment analysts?
Significantly higher profits than other companies in the same industry, without a clear-cut reason why.
I'll talk about these in more detail in future posts.
Read more about Katerina Carter and Exit Strategy at http://colleencross.com/

There's No Run Like a Snow Run

There's nothing like a morning run in the snow to wake you up - and get your feet wet!
Some friends are training for a half marathon in a month.  The rest of us?  Maybe we're feeling a little guilty about all that down time in December.  Of course, that didn't stop us from indulging in coffee and bakery treats at the end of the run, 'cause we earned it! 
Read more of my blog at http://colleencross.com/ or check out Exit Strategy , #1 in the Katerina Carter suspense series.

Cycling

Went cycling yesterday. It was my first ride in months!  I've been taking a break from riding, partly because of Christmas, but also because winter has set in.  But that's really no excuse, since I have all the winter clothing. I even have a "winter" bike.

It was a beautiful day for a ride. The air was crisp, the sun was shining, and all the birds were out. We saw an eagle perched above, eating his catch. Stellar Jays and finches alike were singing their songs.

We rode along River Road and watched the ducks and tug boats share the Fraser River.  River Road is one of the settings in  Exit Strategy . Something happens to Kat there. I won't tell you what, because that would give away the story. You'll have to read the book.  
I get some of my best ideas while outside riding or running.  It's probably from the fresh air and change of scenery.  When I take my mind off a problem, I am more likely to arrive at the solution.  Ideas just seem to flow better when unforced. 
After riding past acres of cranberry fields, we stopped for enchiladas and Mexican hot chocolate at a Mexican deli.
Who could ask for a more perfect day?
Read more at http://colleencross.com/ or buy Exit Strategy on Amazon

Financial Statement Fraud Drivers

Why do companies falsify financial statements? Most of the top reasons have nothing to do with maximizing shareholder return, and everything to do with management's return.

In Exit Strategy , financial statement red flags help forensic accountant Kat Carter uncover a massive blood diamond laundering scheme.

Some of the top reasons for financial statement fraud are listed below, along with some things to watch for.

1. To maxmimize senior management's compensation. This is probably the most common driver.  If the fraud remaines undetected, the too-good-to-be-true financial results can lead to huge wealth and recognition for management. Their bonuses are based on it. Many of today's convicted fraudsters were once revered for their successes, touted as "the best" in their field. 

2. To maintain or increase the company's stock price.  Often senior management has a significant stake in the company's stock.

3. To cover up an underlying problem, like high debt.  If debt is high relative to other financial statement items, such as assests, revenues, or income, it can throw off the bank ratios.  Banks require borrowers to keep debt at a certain level relative to assets or income. If a company doesn't, the bank will call the loan (demand immediate repayment).  Losing this financing can spell disaster to an over-leveraged company.
And, as you probably guessed, this impacts management compensation too. So, beware of companies with high debt, even if they appear to be fine.

In my next post I'll touch on some financial statement red flags that could indicate a fraud.

Read more about Katerina Carter and Exit Strategy at http://colleencross.com/

Exit Strategy Featured on Indie Book Reviews

Exit Strategy is featured on Indie Book Reviews today.  Hope you'll check it out on Amazon, BN, etc and tell all your friends about Book #1 in the Katerina Carter Suspense Series and other Indie books!
Amazon Kindle:  http://ow.ly/87aR7 Sony Epub: http://ow.ly/87aUS
Kobo EPub: http://ow.ly/87b5D Nook EPub: http://ow.ly/87aZx
Apple iBook: Available now on iTunes under Books/Mysteries & Thrillers

Exit Strategy - Food for Thought

Exit Strategy is now out in e-book, paperback, and in this limited edition, edible version!
A limited edition of one, that is!  And I'm keeping it all to myself. 
This cake was made in the image of my debut thriller, Exit Strategy.  The details on the cake are amazing: a bagful of diamonds on top that spills down the sides, creased pages and even a bookmark!  Hubby and friends recently threw me a surprise birthday bash and my friend Barb brought this amazing cake.  Isn't it incredible?  I didn't think any dessert could be too good to eat, but this one is! I am keeping it forever. I can do that somehow, right? 
That's the paperback version of Exit Strategy in the picture above.  It will be released later this month.  The e-book version is available atAmazon Kobo Barnes & Noble Sony, i Tunes and all other e-book retailers.
Life is good, and I'm very lucky to know so many wonderful people.  And I'm honored that you are reading my blog.  Thank you.

The Finish Line

I love to run and travel. Whenever possible I try to combine the two by running a destination marathon. There's something exciting about arriving in a strange city, not knowing exactly where the twenty six mile course will lead, or how things will turn out.  My latest marathon was lucky thirteen, and it coincided with the release of my debut thriller, Exit Strategy. 
Like most marathons, this one starts early. It's cold and dark as we huddle at the start line, waiting for the gun. The race begins and we run on the frost-covered road, still devoid of cars or other people, as the surrounding neighborhoods slowly wake up. I don't know where I'm going, but the crisp morning air holds promise and I'm full of energy.
Sometime later, maybe at twenty or twenty-two or twenty-four miles, I waver. My legs stiffen, my feet burn, and my willpower wanes.  I want to stop, unlace my shoes and forget about this race. I want to join the people standing on the side of the road with their steaming coffees and warm, dry clothing.   
Then I remember: writing a book feels this way to me, too. Ideas come in a rush, screaming to be put down on paper. It's steady progress for awhile, until everything falls apart. Then I pick up the pieces and rebuild, and do whatever it takes to get to the finish line.  It's always worthwhile.
Get Colleen Cross's debut thriller, Exit Strategy on Ebook available at:
Amazon
Kobo
Barnes & Noble
Sony, iTunes, and other retailers.