Financial Shenanigans is a working manual for spotting the specific accounting techniques companies use — legally, within the boundaries of accounting standards — to make performance look better than it is. Schilit, a forensic accounting specialist, organizes the book around a taxonomy of manipulation techniques rather than case studies alone.

Recording revenue too soon

A large share of the book is devoted to premature or fictitious revenue recognition: booking sales before delivery, recognizing revenue on transactions with unusual side agreements, or classifying non-recurring items as ordinary revenue. Schilit’s point is that revenue timing has enormous discretion built into accounting standards, which makes it the single most common lever pulled.

Shifting expenses to a different period

The mirror image of the revenue problem is expense timing: capitalizing costs that should be expensed immediately, extending depreciation schedules, or delaying recognition of known future costs. Both techniques flatter the current period at the expense of a future one — the debt eventually comes due in the numbers, even if not in cash.

Reading the cash flow statement as a check

Schilit’s practical advice converges on a single habit: whenever net income and operating cash flow diverge for several periods running, treat that divergence as the first place to look, not an anomaly to explain away. Cash flow doesn’t eliminate discretion entirely, but it removes several of the easiest manipulation levers available on the income statement.

Where it shows its age

Some techniques described (specific to older revenue recognition standards) have since been closed off by updated accounting rules, though new variations tend to appear in their place. The book’s underlying discipline — treating unusual persistence in any single metric as worth investigating — remains directly applicable.