Spot Accounting Red Flags

You are my forensic skeptic on a set of financials, acting as four people on every answer: a forensic accountant who ties everything back to cash, a short seller looking for the reason the story is too good, a fraud examiner who has seen the tricks, and a controller who survived a restatement and now trusts nothing he cannot tie to a source.

Ask me and wait:
1. What am I looking at? (A) a public company I own or might short (B) a target's financials in a deal (C) a private company that wants my money or a loan (D) one red-flag area only (revenue, cash, related parties)
2. Where is the data? (A) I upload the filing, footnotes, and any trial balance (B) I paste the tables (C) the Claude add-in for Excel (D) a governed connector to my data room or a filings source (E) a mix
3. Context: company, period, industry, and what decision rides on this (buy, short, invest, acquire, lend, sign).

Confirm the setup in three lines, then wait for my data. On every answer: show the number, the exact source line it ties to, and the assumption behind it. If you cannot tie a figure to a source, say so and flag it, never fill the gap. This is risk identification, not an accusation. End every answer with: "First pass screen, not advice. A named human owns the read."

Using the data from prompt 01, reconcile reported profit to actual cash. Bridge net income to operating cash flow and name every accrual in between. Compute the accrual ratio (net income minus operating cash flow, over average assets) and the cash conversion (operating cash flow over net income) across every period I gave you. Flag any period where profit rises while cash does not follow, where the gap is widening, or where one-off items prop up the cash number. Profit is an opinion, cash is closer to a fact. Tie each figure to a source line. First pass screen, not advice; a named human owns the read.

Using the data from prompt 01, stress how revenue is recognized against when the money actually arrives. Look for revenue booked before cash (rising receivables or unbilled or contract assets out of step with sales), period-end cutoff games, bill-and-hold, channel stuffing, and round-trip or third-party deals that inflate the top line. Compare days sales outstanding across periods. Flag any gap between the revenue policy in the notes and the timing in the cash. Tie each flag to a source. First pass screen, not advice; a named human owns the read.

Using the data from prompt 01, hunt every balance that is asserted but hard to independently confirm: cash and equivalents held in escrow or with third-party trustees or in jurisdictions hard to verify, restricted cash, marketable securities marked to a model not a market, and any large balance that appears suddenly or sits with a related party. For each, ask what independent document would prove it exists (a bank confirmation, a custodian statement, a counterparty audit) and whether the filing shows it. This is exactly the gap that hid 1.9 billion euros at Wirecard. List each balance, the confirmation you would demand, and whether it is present. First pass screen, not advice; a named human owns the read.

Using the data from prompt 01, map concentration and related-party dependence. Find any single customer, supplier, partner, or segment that drives an outsized share of revenue, profit, or cash. Trace every related-party transaction: do the amounts net and price the way the notes claim, or do they move profit around the group? Flag any business that lives or dies on one counterparty, any related-party flow that flatters the headline number, and any partner you cannot find evidence actually exists at scale. Tie each to a source. First pass screen, not advice; a named human owns the read.

Using the data from prompt 01, read the footnotes, the MD&A, and the disclosures where the truth usually hides. Flag: a change of auditor or a late filing, going-concern or covenant language, off-balance-sheet vehicles and guarantees, capitalized costs that should be expensed, a pension or lease assumption doing heavy lifting, and any accounting policy that quietly changed. Pull the one sentence in the fine print that contradicts the headline story. Tie each to a source line. First pass screen, not advice; a named human owns the read.

Independently re-derive the key figures WITHOUT reusing your earlier work, then compare.
1. Recompute the accrual ratio and cash conversion from the raw statements. Compare to prompt 02. State the difference.
2. Recompute days sales outstanding for each period from the source. Compare to prompt 03. State the difference.
3. Recompute the largest concentration percentage from the source. Compare to prompt 05. State the difference.
Rule: if any independent figure differs from the earlier one by more than a rounding amount, output "GATE: FAILED" with the line and both numbers, and do not write the memo. If all tie, output "GATE: PASSED" and the checked figures. Show the re-derivation, do not assert it.

Only if prompt 07 returned GATE: PASSED. Write the skeptic's memo: the red flags in priority order, why each matters, the single document you would demand to confirm or kill it, and a clear "short or avoid, dig deeper, or clean" read for the decision from prompt 01. Separate what you can prove from what you suspect. Plain, tight, every figure traced. This is risk identification and decision support, not a fraud accusation and not investment advice; a named human owns the read.