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

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