Key Takeaways
- Ghost tenants, inflated rents, and phantom other income are the three most common income inflation patterns.
- Self-management without imputed fees and deferred maintenance are the most common expense concealment methods.
- Bank statement reconciliation is the single most powerful fraud detection technique.
- Benford's Law analysis can flag fabricated financial data that uses too many round numbers.
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Test Your Knowledge
1.What is the single most effective financial fraud detection technique in DD?
2.How can Benford's Law be used in financial DD?
3.What expense concealment pattern should trigger suspicion?