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Finding "Under Pressure" Frauds

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If there are staff in your organisation whose job security, future prospects, pay or bonuses depend on them meeting set performance measures, there is a risk that they will fiddle the books to meet those measures.  

Here are some of the areas that are commonly manipulated in perpetrating these “under pressure” frauds: 

·        overestimate the quantities of stocks during stock takes; 

·        bringing sales into account in the current financial period even though they really occurred after the end of the period; 

·        bringing sales returns into account in the next financial period even though they really occurred in this period; 

·        manipulate the aging of debtors accounts; 

·        overstating the security for debts; 

·        ignoring bad and doubtful debts; 

·        processing fictitious sales; 

·        understating accruals and other liabilities at the end of the financial period; 

·        ignoring potential liabilities; 

·        changing accounting policies to manipulate profits and net asset values; 

·        not taking into account the fact some stocks are obsolete, damaged, etc. 

·        overstating the value of stocks; 

·        withholding credit notes to customers and clients until after the end of the financial period; 

·        overstating prepayments and transferring expenses to asset accounts; 

·        unrealistically increasing the credit limits of customers so that sales can be made to customers who would not otherwise qualify for these sales; and 

·        manipulating markets to maintain artificially high prices and values. 

 

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For more tips, advice and practical pointers see Fraudproof Your Business Manual.