Q: How to do I find out whether a company has safeguards and procedures in place to protect investors from fraud?
A: The memory of the frauds at Enron and Worldcom still haunt many investors. There have been countless books written and conferences held to teach investors how to avoid seeing their money vanish due to an accounting fraud.
There's really no way for an investor, outside of a company, to know for sure whether or not the company's financials are fraudulent. Investors must rely on the auditors the companies hire and on regulators to do their jobs ferreting out problems before they reach Enron proportions. But, there are some red flags investors can recognize.
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A: The memory of the frauds at Enron and Worldcom still haunt many investors. There have been countless books written and conferences held to teach investors how to avoid seeing their money vanish due to an accounting fraud.
There's really no way for an investor, outside of a company, to know for sure whether or not the company's financials are fraudulent. Investors must rely on the auditors the companies hire and on regulators to do their jobs ferreting out problems before they reach Enron proportions. But, there are some red flags investors can recognize.
Read More Article...
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