Checklist of Accounting Fraud: How Fraud Occurs-Manipulating Stocks And Cost Of Goods

November 16th, 2009 Comments off
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Example of such Accounting Fraud

AREAS AND COMMON METHODS USED TO FRAUD

PharMor

 

  

AREA: MANIPULATION OF INVENTORY AND OR COST OF GOODS SOLD

  • Over-counting physical inventory,
  • Over-valuation of inventory,
  • Not writing off obsolete inventory,
  • Not providing for slow-moving inventory,
  • Incorrect costing of inventory,
  • Record fictitious inventory into the books of account,
  • Under-record purchases,
  • Record purchases after financial year end closes,
  • Omission of recording purchases,
  • Overstating returns to suppliers,
  • Record returns in an earlier period by ignoring the proper cut-off,
  • Overstate discounts,
  • Record very low amount of costs of goods sold,
  • Omit to records cost of goods sold or reduce inventory

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