Report on Financial Statement Fraud Scheme Case Study: the Importance of Timing

For example when there is an abnormal growth in number of day’s sales in receivable or decline in day’s purchases in accounts payable. These abnormalities and abuse can be avoided through reviewing acquisitions journal, general ledger and accounts payable master file to ensure that there are no large or unusual amounts. Also review vendors’ invoices, receiving reports, purchase orders and purchase requisitions to verify that they are valid and are for reasonable amounts. Trace inventory acquisitions to the inventory master file to verify that items recorded as inventory are all valid. Trace receiving reports and vendors’ invoices to the acquisitions journal to verify that all received goods have been properly recorded. Compare transactions recorded in the acquisitions journal to the vendors’ invoices, receiving reports, purchase orders, and purchase requisitions to verify that they have been recorded at their correct amounts, date, and quantities.

Other factors that aided in this investigation are from checking cash, and disbursement journal entries to be dated with the date of the check. The related monthly general ledger summary entries shall carry the date of the month summarized. Procedures that need to be implemented to ensure that fraudulent processing of vendor invoices does not exists would consist of: • Only original invoices being processed for payment

• Proper authorization obtained for price differences on