Fraud :: Free Essay Writer

posticheCut-off FraudFraud involves purposeful attempts to deceive, not good-faith disagreements on accounting treatments. sensation of the five basic methods companies used to get ahead up their profits is antic in timing, which is also c onlyed cut-off fraud. This is d unrivalled by recognizing profits early and liabilities and expenses late. correspond to GAAP, revenue is recognized when the earnings process is complete and the rights of ownership fill passed from seller to buyer. There are three categories in revenue learning fraud 1) playing with time, 2) recording revenue when services are good-tempered due, 3) shipping mathematical product before the sale is final. Playing with time is the most common way to commit revenue recognition fraud. It involves holding the books rough past the end of the accounting period to accumulate more sales. For example, one such company actually set to stop there clock at the end of each quarter until targets sales are made. A nd all the sales would be counted as in the accounting period to boost up their sales. Another method for recognizing revenue early is booking the intact revenue amount when service is not completely rendered. Many companies slew the percentage-of-completion contracts by taking the cash payments into income, fail to record offsetting accruals for services nonrecreational for in advance, and record refundable deposits as income. The last category is shipping merchandise before the sale is final. Consignment merchandise is counted as being sold. A few companies also shipped merchandise to private warehouse for storage and counted it as being sold. If one person handle the same transaction from low to end, premature revenue recognition is easier to accomplish. The responsibilities of order entry, shipping, billing, accounts receivable detail and prevalent ledge should be distributed among different employees. With several different employees handling the process, itll be m ore difficult to commit fraud.