Q: I own stock in a company that seems to take “one time” charges at least every other quarter. Could this be a sign of accounting fraud?—David Laidler, Clearwater, FL

A: Frequent one-time charges are not uncommon, particularly if the company is in acquisition mode. In general, such charges are a fact of corporate accounting, though they can complicate comparisons and make it difficult to get a real sense of a company’s financial health.

Causes for concern. That being said, a pattern of large write-offs over many years could be a sign that earnings are being manipulated. To get a better sense of the company’s true earnings in such circumstances, take a look at operating income over time, which excludes one-time charges.

Another accounting red flag: accounts receivable. If they’re consistently growing faster than sales, it’s an indication the company is selling to customers that either can’t or won’t pay. That will likely lead to a pileup of bad debt. Even worse, it may indicate that management is living in la-la land: booking revenue before the cash actually comes in the door.

A couple of other items to look out for: deferred revenues and accelerated expenses. Deferred revenues are essentially underreported sales; they’re used to create a reserve that can be pulled forward to pump up a less successful year. Accelerated expenses are costs that pop up in time periods in which they didn’t actually occur.

Both of these practices have the same effect on net income and profitability ratios. And both fall into an ethical and legal gray area known as “smoothing.” While technically legal, they can be good indications that management isn’t above fudging the numbers.

Stop, look and listen. There are many other ways financials can be manipulated, but you can do some things to avoid falling victim to fraud. The first is to look at the financials over the long term—at least 10 years if possible. Check the balance sheet and income statement for odd adjustments. If you find any, dig deeper; in the meantime, you may want to steer clear of the stock.

Another good approach is to pay close attention to the explanations given for any anomalies in the reported financials or in management statements. If the explanations don’t make sense, contact the company’s investor relations department. If you don’t get a straight answer, then beware: Your money might be at risk.

Q: A company I’ve invested in is offering to buy back shares through a modified Dutch auction: I can pick from a range of sales prices. How do I decide if the buyback is a good deal; and, if it is, at what price?—via e-mail

A: The auction approach requires a little bit of thinking, forecasting and basic math to figure out.

To keep things simple, let’s say this company’s shares are currently at $10, and it has historically traded at a price-to-earnings (P/E) multiple of 10. It also has a history of growing earnings about 5 percent annually, and you expect to hold on to the stock for another two years. Additionally, you don’t expect any significant changes in economic or industry conditions over that period, so you’re comfortable projecting historical performance out two more years, Year 1 and Year 2.

Under this scenario, the company’s earnings should come out to $1.10 in Year 2, which at a P/E of 10, equates to a share price of $11.00.

Going Dutch. In a modified Dutch auction, a company usually has a fixed amount of money allocated to repurchase shares, and it will begin buying at the lowest specified price range.

If it has money left over after repurchasing shares in the lowest range, it will move up to the next level and keep moving up until its allocated capital is spent.

So, in our example, you would price your shares at $11.00 or more to get your full expected value. Otherwise, you’re probably better off holding, assuming you don’t expect any major changes in the business environment.

If $11.00 is near the bottom of the company’s specified range, odds are your shares will be bought. If it’s near the top, there’s a good chance the company will run out of money before it gets to your offer.

Another option is for you to offer portions of your shares at various price ranges, starting with $11.00. And if you think the outlook for the stock is actually deteriorating, by all means, price all your shares to sell.