FRAUD :-
It means false representation making wrong entry intentionally believing to be wrong.
Following are the important kinds of fraud which are connected with the accounts.
1. Misappropriation of cash.
2. Misappropriation of goods.
3. Manipulation.
MISAPPROPRIATION OF CASH :-
Meaning :-
It means to take money dishonestly for oneself. These are two methods by which misappropriation of money may be concealed by the dishonest employees.
1. Entering fictitious or excess payments.
2. Omitting to enter receipts Principal ways of misappropriation of cash.
3. Fictitious purchase is recorded for the purpose of misappropriating the corresponding cash payments.
4. Fictitious expenses are recorded for the purpose of misappropriation.
5. By putting the dummy names on the wages cash is misappropriated.
6. Theft of unusual receipts of cash like the sale of waste.
7. Sales cash may not be entered in the books and cash may be misappropriated.
8. By over casting the wages sheet, wages cash is misappropriated.
9. Misappropriation of the proceeds of bill discounted the bill being shown in hand.
10. For the purpose of stealing an equivalent cash receipt, false credits are passed in the customer's account in receipt of discounts and returns.
11. Cash received on account of goods sent for sale is a misappropriated by showing that goods are return back can not sold.
12. By tempering in the cash receipts and disbursement records cash is misappropriated..
13. Cash received from the customer is misappropriated by omitting the sale.
14. Approved and paid vouchers may also used for further payment.
MISAPPROPRIATION OF GOODS :-
Meaning :-
It means to take the goods dishonestly. Theft of goods is found very common among the employees where inter control system over the stock is very poor.
MANIPULATION OF ACCOUNTS :-
False representation of accounts is another kind of fraud. This type of fraud is usually committed by the directors and management of the business. The object of such fraud is to show more profits or less profits than they actually are some times to maintain the confidence of the share holders they show more profit then the real. Some times directors show less profit in order to purchased the share at less rate. This fraud may take place in the following way.
1. Over valuation or under valuation of stock.
2. Over valuation or under valuation of assets and liabilities.
3. Recording of fictitious purchase.
4. Recording of less purchase than original.
5. Use of secret reserves without disclosing to the share holders during the period.
6. Depreciation not provided.
7. Depreciation provided but more or less than the real.
8. Recording fictitious expenses or omission of expenses.
9. Revenue and expenditure charged to capital and vice verse.
10. Credit taking for accrued income not likely to be received or omission of income.
DETECTION OF MISAPPROPRIATION OF CASH :-
Detection of frauds is the main responsibility of the auditor. An auditor can detect his fraud if he conducts the complete vouching of cash. Second helpful thing in detecting this fraud is the effective internal control system. If this system is efficient then it will be very easy for the auditor to locate this fraud.
DETECTION OF MISAPPROPRIATION OF GOODS :-
If the stock registers are properly maintained. Purchase, consumption and stock taking record is available. Physically stock can be checked auditor can be compared with record and misappropriation may be detected.
DETECTION OF MANIPULATION OF ACCOUNTS :-
Vouching, routine checking, verification and intelligent inquiries of an auditor may detect such type frauds. If an auditor exercises his intelligent check while examining and accepting the evidence he may discover the frauds.
No comments:
Post a Comment