Bharat’s Red Flags Compendium Practical Case Studies in Forensic Accounting & Corporate Fraud Investigation by CA. Kamal Garg – 1st Edition 2025.

Bharat’s Red Flags Compendium Practical Case Studies in Forensic Accounting & Corporate Fraud Investigation by CA. Kamal Garg – 1st Edition 2025.

About Red Flags Compendium Practical Case Studies in Forensic Accounting & Corporate Fraud Investigation

Chapter 1       Red Flags in Forensic Accounting and Investigation – An Introduction

Chapter 2       Material Business Changes

Chapter 3       Scale of Operations of a Company

Chapter 4       Complex Transaction Structures

Chapter 5       Predominance of Cash Transactions

Chapter 6       Registered Office of the Company

Chapter 7       Foreign Entity Connections and Potential Non-Compliance with FEMA

Chapter 8       Team Competency and Presence for Financial as well as Operations related matters

Chapter 9       Director Disqualification under Section 164(2) of the Companies Act, 2013

Chapter 10     Director Disqualification Due to Non-Filing of Financial Statements by Connected Entities

Chapter 11     Frequent Changes in Directors and Key Managerial Personnel

Chapter 12     Name Sake Directors

Chapter 13     Frequent Changes in Auditors and Auditor Independence

Chapter 14     Large Number of Related or Connected Entities

Chapter 15     Materially Adverse Information Identified through Public Domain Searches

Chapter 16     Promoters and Connected Entities Marked as Wilful Defaulters by Banks and Financial Institutions

Chapter 17     Corporate and Bank Guarantees Issued to Related Parties and Third Parties

Chapter 18     Unconfirmed Balances of Debtors, Creditors, Loans, and Advances

Chapter 19     High-Value Receipts and Payments during the Look-Back Period

Chapter 20     Legal and Professional Fees as a Potential Red Flag Indicator

Chapter 21     Kickbacks in Procurement Contracts

Chapter 22     Discrepancies Between Claims and Asset Values of the Corporate Debtor

Chapter 23     Non-Maintenance and Loss of Books and Records

Chapter 24     Weak Accounting Systems and Internal Controls

Chapter 25     Non-Registration and Non-Filing of GST/IT Returns

Chapter 26     Material Arbitration Proceedings

Chapter 27     Clean Audit Reports and the Need for an Avoidance Review

Chapter 28     Assets Featuring in the Balance Sheet without Proper Title

Chapter 29     Frequent Changes in Accounting Policies

Chapter 30     Incomplete Board Reports not in Line with the Companies Act, 2013

Chapter 31     Assets in Transit or Not Cleared from Port for a Significant Period of Time

Chapter 32     Assets Used by Other Entities on a Free of Cost or Lower-than-Market Charge Basis

Chapter 33     Significant Aging of Capital Work in Progress

Chapter 34     Significant Revaluation Reserves in the Balance Sheet

Chapter 35     Sale and Leaseback Transactions of Assets Pledged in Favor of Lenders

Chapter 36     Unauthorized Creation of Security Interests

Chapter 37     Assets Used for Personal Purposes of Promoters with Costs Borne by the Company

Chapter 38     Large Undervalued Asset Sales without Valuation Reports or Competitive Sale Process

Chapter 39     Incorporation of Special Purpose Vehicles (SPVs) and Transfer of Funds without Underlying Business Purpose

Chapter 40     Significant Investments in Partnership Firms and Other Unincorporated Entities

Chapter 41     Indian Special Purpose Vehicle (SPV) Subject to Strike Off and Loss of Trail of Funds

Chapter 42     Foreign Special Purpose Vehicle (SPV) Closed without Notice to Lenders and Loss of Fund Traceability

Chapter 43     Creation of Assets Abroad and in Related Entities

Chapter 44     Sale or Transfer of Key Revenue-Earning Business Divisions

Chapter 45     Shares of Investee Entities Purchased as Investments at Exorbitant or Unjustified Premiums

Chapter 46     No Returns on Investments in Terms of Dividends or Refund of Capital Even after Long Periods

Chapter 47     Large Value Investments Extinguished or Written off and Recorded as Losses without Proper Rationale, Leading to Erosion of Net Worth

Chapter 48     Shareholding Dilution by Fraudulent and Collusive Rights Issue Process and Relinquishments in Investee Companies

Chapter 49     Variances Between Stock Reporting to Lenders and Books of Accounts

Chapter 50     Sale of Inventory Other than in the Normal Course of Business

Chapter 51     Large Sales Returns to Certain Operational Creditors to Enable Preferential Payments for Current Transactions in the Ordinary Course of Business

Chapter 52     Inflated Stock and Book Debts Reporting without Underlying Inventory

Chapter 53     Customer Master Data is Not Maintained Properly and is Incomplete

Chapter 54     Fraudulent Accounting and Reporting of Sales and Inflation of Receivables

Chapter 55     High Value Discounts Offered to Some Customers and Not to Others

Chapter 56     Collections Routed Through Non-Authorized Bank Accounts or Received in Cash

Chapter 57     Customer Payments are Made Directly to Vendors/ Promoters and Receivable Balances are Not Reconciled

Chapter 58     Significant Aging of Receivables Balances

Chapter 59     Assignment of Receivables to Third Parties/Related Parties

Chapter 60     Large Receivables Extinguished/Written off and Recorded as Losses without Proper Rationale/Legal Efforts and Eroding the Net Worth

Chapter 61     Fictitious Bank Receipts (In Bank Book but Not in Bank Statements)

Chapter 62     Sudden Increase in Unbilled Revenue

Chapter 63     Receivables Written off on the Basis of Arbitral Awards

Chapter 64     Audit Qualifications on Revenue Recognition, Inability to Obtain Balance Confirmations

Chapter 65     Inflated Book Debts Reporting to Bankers Not Reconciled to Books of Accounts

Chapter 66     Presence of a High Number of Bank Accounts and Inter-Se Movement of Funds

Chapter 67     Diversion of Funds to Parties Other than Normal Business Payees

Chapter 68     Round Tripping of Funds Between Various Cash Credit Accounts Held with Different Bankers to Enhance Debit and Credit Summations of Bank Accounts

Chapter 69     Fund Movements Not through Designated Consortium Accounts

Chapter 70     Loans and Advances given without any Agreements and Legal Recourse

Chapter 71     Loans to Directors/Entities for No Business Purpose and Includes Related/Connected Entities

Chapter 72     Significant Aging of Loan Balances

Chapter 73     Loans and Advances on an Interest-Free Basis Although Interest is Paid by the Company

Chapter 74     Large Value Loans and Advances Written off without any Legal Recourse/Attempts to Collect and Eroding the Net Worth

Chapter 75     Loans and Advances Outstanding in Entities which are under “Strike-off” as per MCA Records and No Proceedings are Stated as Possible

Chapter 76     Share Capital Not Received by Bank Funds Process but by Adjustment Entries

Chapter 77     Return of Allotment Not Filed or Filed with Wrong Facts and Figures

Chapter 78     Exorbitant Share Premium from Investor Companies Not through Bank Sources and/or Diverted Back later

Chapter 79     Shareholding in the CD is Fictitious — the Investor-Shareholders have themselves Extinguished the Investments in their Balance Sheets

Chapter 80     Company Funds have been used to Purchase Shares of the Company by Directors

Chapter 81     Loans Recorded by Mere Book Entries without Corresponding Bank Inflows — Preference/ Fraudulent

Chapter 82     Round Tripping Loans Received, diverted to Other Group/Connected Entities without any Business Purpose — Diversion of Funds

Chapter 83     Loans taken without No Objection from Existing Lenders and Security Interest Created thereon

Chapter 84     Unsecured Loan becomes a Secured Loan without New Value

Chapter 85     Loans Stated as Received in Cash

Chapter 86     Certain Loans Settled in Priority over some Other Loans

Chapter 87     Loans Received at Exorbitant Rates of Interest or Security Created and Purchases on Credit at Exorbitant Prices

Chapter 88     Loan Agreement Stated as Secured Loan by Unregistered Memorandum of Deposit of Title Deed (MoDTD) and Ante-Dated Transactions

Chapter 89     Where Loans have been Recognized due to Invocation of Bank Guarantees (BGs), where such BGs did Not Reflect Genuine Business Transactions

Chapter 90     Security Interests and Claims Recognized on Basis of Award by Court or Tribunal

Chapter 91     Conversion of Unsecured Loan to Secured Loans in Order to Defraud other Secured Creditors Impacting the Waterfall Mechanism under Section 53 of the Insolvency and Bankruptcy Code

Chapter 92     Fictitious Purchases of Goods and Services and Consequent Liabilities and Losses

Chapter 93     Transactions Especially with Related Parties Not on an Arms-Length Basis

Chapter 94     Significant Aging of Payables Balances

Chapter 95     High Value Sole Selling or Purchase Agents and/or Related Parties

Chapter 96     Creditors Settled Directly by Customers but still Showing as Outstanding both for Receivables and Payables

Chapter 97     LCs Issued for Local Trade Related Party Transactions without Underlying Trade Transactions

Chapter 98     Significant Reduction in the Stake of Promoter/ Director or Increase in the Encumbered Shares of Promoter/Director

Chapter 99     Resignation of the Key Personnel and Frequent Changes in the Management

Chapter 100   Increase in Borrowings, Despite Huge Cash and Cash Equivalents in the Borrower’s Balance Sheet

Chapter 101   Claims Not Acknowledged as Debt High

Chapter 102   Large Number of Transactions with Inter-Connected Companies and large Outstanding from such Companies

Chapter 103   Fictitious Bank Receipts in Bank Books

Chapter 104   Exorbitant Share Premium from Investor Companies

Chapter 105   Share Capital Contributions Not through Bank Channels

Chapter 106   Inflated Stock and Book Debts Reporting

Chapter 107   Hidden Dangers in Corporate Financial Statements — A Comprehensive Analysis of Red Flags

Chapter 108   Corporate Social Responsibility (CSR) Fraud and Forensic Investigation — A Comprehensive Analysis

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