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| Beliefs, Behavior, and Fraud in Valuations (2198Q) |
Course CPE: 2 hours
Fields of Study: Behavioral Ethics–1 hr; Accounting–1 hr
Program Level: Intermediate
Prerequisites: Previous training or research on subject matter being taught. Such persons are often at a mid-level within the organization, with operational and/or supervisory responsibilities.
Advanced Preparation: None
Delivery Method: QAS Self-Study |
Item
Number: 25SBV0911BBF
Shipping Weight: 0lbs. 0oz. |
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$147.00 |
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Recording Date: September 11, 2025
Presenter: Sri Ramamoorti and Daven Morrison
Program Description:
In cases where enterprises and their assets are to be assigned a value, there is an inherent propensity to present the value of an enterprise or group of assets as materially higher or lower than conventional valuation methods would suggest (e.g., HP’s acquisition of Autonomy in 2011).
This sort of “window dressing the financials” constitutes fraud when performed deliberately in the context of M&A deals. Misrepresentation of financial information can occur on either the buy side or the sell side; financial disputes, like other disputes that go to court, have a plaintiff and a defendant.
Fraud is not committed by computers or other forms of technology. However, technology can certainly be used as a tool of white-collar crime. Fraud is committed by the people using the technology to achieve an illegal goal. Because fraud is committed by people, it is driven by psychology. There are many ways to lie and misrepresent, so detecting deception remains an essential capability that only human agents possess.
The psychology of fraud explains why people commit it. Greed is often assumed, but in most cases of fraud—including those committed in valuation engagements—greed is a symptom, not the underlying pathology. Understanding the mind of the white-collar offender is key to recognizing the beliefs and motivations that underpin fraudulent behavior. We call this approach to behavioral forensics, or the psychology of fraud, “bringing Freud to fraud.”©
The human pathology behind fraud varies by individual. Deep psychological reasons, in addition to economic motivations, can drive the need to overstate or understate the value of an enterprise or its assets. These may include keeping up with the Joneses or social comparison, achieving parity through revenge for perceived slights or past wrongs, misdirected idealism to support a cause, seeking compensation for unrecognized contributions, obsession with status stemming from childhood shame, or even psychopathy (the “dark triad” personalities). The list is a long one.
In this course, we will explore some of these fascinating perspectives and offer techniques for deception detection in the context of valuation, as well as other applications.
Takeaways
- Understand the landscape of valuation, disputes, and forensic accounting
- Examples of "window dressing" in valuations
- Motivations for fraud in this context, the human factor
- Suggestio falsi and suppressio veri
- Examples of the psychology of lying in financial reporting
- Psychological materiality
- The "dark triad" personalities
- The impact of agentic AI going forward
After completing this course, you will be able to:
- Identify the foundations of behavioral forensics and its relevance for M&A valuation and corporate governance
- Recognize examples of lying in financial reporting
- Determine the significance of psychological materiality
- Differentiate the corrosive influence of the dark triad of human personalities including narcissists Machiavellians and psychopaths
- Select how agentic AI will add another layer of complexity to the discussion
For more information regarding refund or concerns, please contact our offices at (800) 677-2009.
The Consultants’ Training Institute (CTI) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. |
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