Checklist of Accounting Fraud: How Fraud Occurs-The Manipulating Revenue and Accounts Receivable

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

 

AREAS AND COMMON METHODS USED TO FRAUD

 

 

GLOBAL CROSSING &  QUEST

 

AREA: SALES MANIPULATION

  • Recording fictitious revenue ( related parties, sales with conditions, consignment or sham sales),

  • Recognize revenues too early by having improper cut-off,

  • Overstating real revenue by altering contracts and inflating the amount, etc)

  • Omission to record returned goods,

  • Record returned goods after financial year end closes,

  • Do not recognize discounts given hence increasing revenue,

AREAS: ACCOUNTS RECEIVABLES

  • Understate provision for doubtful debts thus overstating receivables,

  • Not writing off uncollectible receivables or wrote off after financial year end closes,

  • Record bank transfers or manipulate cash received from related parties as cash received from customers 

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Financial Accounting

 
 

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