Fraud Risk Assessment and Vulnerability final

Management may also be compensated based on company

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commit the fraud if they feel they are falling short of the quotas. Management may also be compensated based on company value. taken out of the business. Instead, they are just moving around some numbers.The higher assets value means we may qualify for more loans.Lowering recorded expenses helps us reach projected income No purrchase agreements are documented between the customer and the company. Management may not monitor shipping trends. Increases revenue during the period in which the soft sales occur. This may be followed by a period of increased returns. This practice leads to a significant increase in revenue and as such increases net income. The following period might possibly reflect an increase in Sales Returns. Review custoemr complaint logs or any documentation involving goods received prior to an agreement to purchase. Channel Stuffing- offering discounts, extended payment terms or other concessions to customers to promote the sale of products in the current period, when they would not have not been otherwise sold until later periods, if at all. Sales representatives and those employees who communicate directly with customers. Employees working in shipment centers may also have the opportunity to commit this kind of fraud. Ordering shipping staff to send inventory despite a lack of a request. Backdating invoices An excessive number of returns in a subsequent period, often accompanied by an unusual jump in credits Earnings management schemes are often more likely to occur when a company loses a line of business or customer and as a result may not be able to meet industry and/or company projections. The company, if publicly traded may attempt to manage earnings in order to maintain the facade of profitability and keep stock prices up. These schemes may also be used to overstate asset value in an effort to make the company more likely to qualify for loans. Management may have established sales quotas and employees might commit the fraud if they feel they are falling short of the quotas. Management may also be compensated based on company value. It will work itsself out once the returns are made. Must make sure we reach revenue expectations for the period. No purrchase agreements are documented between the customer and the company. Management may not monitor shipping trends. Increase in shipping costs and discounts near end of a given period. This practice causes in increase in sales revenue as well. The following period may show an influx in returns received. Check dates of ivoices and transactions. Also, the next period should have an unusual increase in returns at the beginning of the period. Skimming- funds taken by an employee before the funds are recorded in organization's books Employees with access to the petty cash funds account. Cashiers and employees that may have legitimate or illegitemate access to the location of the cash.
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