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