What are some inherent risks of material misstatement associated with intangible assets?
A 2010 study on fraudulent financial reporting by COSO notes ways in which long-lived assets can be fraudulently overstated, including:
? Fictitious assets on the books (WorldCom)
? Improper and incomplete depreciation (Waste Management)
? Failure to record impairment of assets, especially goodwill (Sun Microsystems)
? Expired or worthless assets left on a company's books (Millacron)
? Assets overvalued upon acquisition, especially in the purchase of a company (WorldCom)
a. What might motivate management to overstate fixed assets?
b. What other factors should the auditor consider when assessing fraud risk related to long-lived assets?