System and method for identifying accounting anomalies to help investors better assess investment risks and opportunities

• US 20070022025A1
• Filed: 06/29/2006
• Published: 01/25/2007
• Est. Priority Date: 06/29/2005
• Status: Active Grant

• Current Assignee: Credit Suisse Securities USA LLC (Credit Suisse)
• Original Assignee: Credit Suisse Securities USA LLC (Credit Suisse)
• Inventors: Litman, Joel, Grazlano, Ronald
• Granted Patent: US 8,234,200 B2
• Time in Patent Office: Days
• US Class Current: 705/30
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A system and method of identifying accounting anomalies to assess investment risks and opportunities. The steps include receiving company data and criteria metrics, and evaluating the company data in view of the criteria metrics to produce a performance indicator. Information, such as an easily read visual flag is provided to a client identifying the performance indicator.

Claims

1. A method of identifying accounting anomalies to assess investment risks and opportunities comprising the steps of:

receiving company data from at least one data client;

receiving criteria metrics from at least one analytic client;

evaluating the company data in view of the criteria metrics to determine at least one performance indicator; and

providing information identifying said at least one performance indicator.

4. The method of claim 1, wherein said criteria metrics are assigned a weighted value.

5. The method of claim 1, wherein said at least one performance indicator comprise a total score.

6. The method of claim 1, wherein said at least one performance indicator comprise a company rank.

2. The method of claim 2, wherein said criteria metrics comprise a plurality of primary financial parameter categories.

3. The method of claim 2, wherein said plurality of primary financial parameter categories comprise revenue recognition, cost recognition, profit and loss to cash flow, balance sheet recognition, and valuation.

7. A system for identifying accounting anomalies comprising:

a data network;

a server computer operatively coupled to the data network and provided with criteria metrics that may be implemented by an accounting anomaly engine therein;

at least one data server computer operatively coupled to said data network for providing company data to the server computer;

at least one user client computer operatively coupled to said data network for receiving a message;

wherein the accounting anomaly engine of the server computer evaluates the company data in view of the criteria metrics to determine at least one performance indicator and provides information to the user client identifying said at least one performance indicator.

8. A system for evaluating information relating to a company to assess investment risk due to accounting anomalies, wherein the information includes financial accounting categories, subcategories and characteristics, the system comprising:

a set of selected primary categories, subcategories and characteristics indicative of accounting anomaly risk, wherein each selected primary category is supported by a selected set of subcategories, and each selected subcategory is supported by a selected set of characteristics;

an anomaly accounting analysis engine configured to;

analyze accounting anomalies in and assign a first risk score to each of the selected characteristics for each of the selected subcategories;

analyze accounting anomalies in and assign a second risk score to each of the selected subcategories, wherein the assigned second risk score for a particular subcategory is based on one or more of the first risk scores assigned to the selected characteristics for the particular subcategory; and

analyze accounting anomalies in and assign a third risk score to each of the selected primary categories, wherein the assigned third risk score for a particular primary category is based on one or more of the second risk scores assigned to the selected subcategories for the particular primary category.

9. The system of claim 8 wherein the anomaly analytics engine is further configured to assign a fourth risk score based on one or more of the assigned first risk scores, assigned second risk scores, and assigned third risk scores.

10. The system of claim 8 wherein the anomaly analytics engine is further configured to assign a comparative risk rank to the company for each selected primary category, subcategory and characteristic and combination thereof.

11. The system of claim 8, further comprising an interactive user display apparatus, wherein the user display apparatus is configured to display at least one of the assigned first risk scores, the assigned second risk scores, the assigned third risk scores, and any combination thereof.

12. The system of claim 8, wherein the interactive user display is further configured to display at least one of:

risk profiles of companies relative to each other, risk profile views in descending/ascending lists, risk profile views by individual primary categories, risk profile views by individual subcategories, and any combination thereof.

13. The system of claim 8, wherein the interactive user display further comprises a visual indicator which is color coded to indicate a level or risk.

14. A system for evaluating information relating to a plurality of companies in a portfolio to assess investment risk due to accounting anomalies, wherein the information includes financial accounting categories, subcategories and characteristics, the system comprising:

a set of selected primary categories, subcategories and characteristics indicative of accounting anomaly risk, wherein each selected primary category is supported by a selected set of subcategories, and each selected subcategory is supported by a selected set of characteristics;

an anomaly accounting analysis engine that, for each of said plurality of companies in the portfolio, is configured to;

analyze accounting anomalies in and assign a first risk score to each of the selected characteristics for each of the selected subcategories;

analyze accounting anomalies in and assign a second risk score to each of the selected subcategories, wherein the assigned second risk score for a particular subcategory is based on one or more of the first risk scores assigned to the selected characteristics for the particular subcategory; and

analyze accounting anomalies in and assign a third risk score to each of the selected primary categories, wherein the assigned third risk score for a particular primary category is based on one or more of the second risk scores assigned to the selected subcategories for the particular primary category.

15. The system of claim 14 wherein the anomaly analytics engine is further configured to assign a fourth risk score based on one or more of the assigned first risk scores, assigned second risk scores, and assigned third risk scores.

16. The system of claim 14 wherein the anomaly analytics engine is further configured to assign a comparative risk rank to each of said plurality of companies for each selected primary category, subcategory and characteristic and combination thereof.

17. The system of claim 14, further comprising an interactive user display apparatus, wherein the user display apparatus is configured to display at least one of the assigned first risk scores, the assigned second risk scores, the assigned third risk scores, and any combination thereof, and a ranking based on any combination thereof.

18. The system of claim 14, wherein the interactive user display further comprises a visual indicator which is color coded to indicate which of said plurality of companies have a higher level or risk relative to other of said plurality of companies.

19. A method for determining a financial risk profile for a company, said method comprising the steps of:

selecting a number of risk categories being associated with financial risk areas;

selecting, for each of said number of risk categories, a number of individual characteristics to support the risk category;

collecting, for each of said number of risk categories, company financial data corresponding to each of said number of individual characteristics supporting the risk category; and

assigning a first risk metric to each of said number of risk categories based on said company financial data;

thereby providing a risk profile for the company comprising a collection of first risk metrics assigned to each of said number of risk categories.

20. The method of claim 19, wherein said step of selecting a plurality of risk categories further comprises the steps of:

selecting a number of primary risk categories; and

selecting, for each of said number of primary risk categories, a number of secondary risk categories to support the primary risk category;

wherein said one or more individual characteristics support each of said number of secondary risk categories and said first risk metrics are assigned to each of said number of secondary risk categories.

21. The method of claim 20, further comprising the step of assigning a second risk metric to each of said number of primary risk categories based on said collection of first risk metrics assigned to each of said number of secondary risk categories supporting the primary risk category.

22. A method for determining financial risk profiles for a portfolio of companies, said method comprising the steps of:

selecting a number of primary risk categories being associated with financial risk areas;

selecting, for each of said number of primary risk categories, a number of secondary risk categories to support the primary risk category;

selecting, for each of said number of secondary risk categories, a number of individual characteristics to support the secondary risk category;

for each of the companies in the portfolio;

collecting, for each of said number of secondary risk categories, company financial data corresponding to each of said number of individual characteristics supporting the secondary risk category; and

assigning a first risk metric to each of said number of secondary risk categories based on said company financial data; and

assigning a second risk metric to each of said number of primary risk categories based on said collection of first risk metrics assigned to each of said number of secondary risk categories supporting the primary risk category;

thereby providing a risk profile for each company in the portfolio comprising a collection of first risk metrics assigned to each of said number of secondary risk categories for the company and a collection of second risk metrics assigned to each of said number of primary risk categories for the company.

23. The method of claim 22 further comprising the step of selectively displaying for each company in the portfolio at least one of the collection of first risk metrics assigned to each of said number of secondary risk categories, the collection of second risk metrics assigned to each of said number of primary risk categories, and a ranking of the company relative to other companies in the portfolio based on any of the foregoing.

24. The method of claim 22 further comprising the step of visually indicating those companies having a high-risk profile relative to other companies in the portfolio.