Improper capitalization of expenses was one of the key methods financial statement fraud allegedly used by:

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The improper capitalization of expenses was a key method used in the financial statement fraud at WorldCom. The company capitalized rather than expensed line costs, resulting in an overstatement of assets and an understatement of expenses. This allowed the company to inflate their earnings and deceive investors. Enron's fraud involved misleading accounting practices such as off-balance-sheet transactions, while Tyco's involved the fraudulent reporting of executive compensation. Raptor was a special purpose entity created by Enron to conceal losses and inflate profits.

Improper Capitalization of Expenses Was One of the Key Methods