Unusually high revenues and low expenses when there isn’t a reason - for example, seasonal or compared to the industry or type of industry that the entity is in
Growth in inventory or debtors that doesn’t match growth in sales or cash flows
Improper capitalisation of expenses in excess of what are considered to be industry norms or reasonable
A very high repairs and maintenance expense in the income statement
Profit margins showing but no tax expense accounted for in the financial statements
Turnover that are positive and growing but operating cash flow that appears to be going down
Loans to executives or other parties that appear to be written off
Gross margin or operating margins out of line with practice, previous periods or excessively low
Fairly excessive use of off-balance sheet entities based on relationships that aren’t standard within the industry
Unusual increases in the book value of assets. This can include stock and trade debtors
Deliberately complex or lack of disclosure notes that make it impossible to fully determine the nature of a transaction
Prior year balances that do not agree with previous financials
