Large frauds can often be detected by performing financial s

Large frauds can often be detected by performing financial statement analysis. Although such analysis can raise areas of concern, not all red flags are the result of fraudulent activities. Reasonable explanations often exist for anomalies in financial statements. The statement of cash flows is one financial statement that is analyzed in order to identify possible fraud. This statement for Kelly Enterprises, Inc., for a three-year period is shown in the table on this page.

Solution

1. Possible red flag may be as follow-

2. Explanation for above concern -

-----------Answer is made to the point as word limit was not specified. In case of doubt feel free to comment :)--------