Back dating invoices

22 Feb

The auditor will normally find that revenue recognition frauds can be subdivided into three categories: holding the books open past the end of the accounting period, recording revenue when services are still due and shipping merchandise before the sale is final.

Probably the most common method to illegally recognize revenue early is to hold the books open past the end of the accounting period to accumulate more sales.

A lack of diligence in employing reasonable and necessary techniques like the ones described below can easily lead to an audit failure.

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Compare the prices on sales invoices against published prices. When merchandise is shipped early, the shipping costs near the end of the accounting period could be higher.As an auditor, considering this fact as part of the risk equation will help keep you from being fooled by fake cut-offs. He didn’t yet know it, but he should have been mortified.Sheelan had just mortgaged all his personal assets to acquire the controlling interest in the 100-year-old Regina Vacuum Cleaner Co.If sales or shipping invoices are out of numerical sequence, check to see if the documentation has been hidden.In early premature revenue recognition schemes, goods are often billed before they are shipped, so quantities of goods shipped will not reconcile to goods billed. Select a sample of sales transactions from the sales journal, obtain the supporting documents and Inspect the sales order for approved credit terms.