FRAUD

TYPES OF FRAUD
Auditing & Assurance

• FRAUD
• Fraudulent Financial Reporting
• 1. Manipulating
• 2. Mispresentation/Intentional omission
• 3. Intentional misappropiation of Accounting Principle
Auditing & Assurance

• Misappropiation of Assets
• 1. Misappropiation of Goods
• 2. Defalcation of Cash
• A. Inflating cash payment
• B. Suppressing cash receipts
• C. Costing wrong amount in the cash book
Auditing & Assurance

• Fraudulent Financial reporting or misappropiation of Assets involves Incentives

or pressure to commit fraud.
• For Example: When Management is under pressure from Source, Outside or
inside the entity to achieve an expected earning targets or financial outcome.
• MANIPULATING OF ACCOUNT:
• Detection/Identifying of manipulating of Accounts with a view presenting a false state
of affairs is a task because generally Management personnel is higher management
guidance are associated with this type of fraud.
• For Example: 1) To avoid incidence of imcome Tax or other Tax. 2) For declaring a
divident when they have insufficient profits.
Auditing & Assurance

• Misappropiation of Assets:
• 1) Misappropiation of goods:
• For example: Management should keep records about the
physical quantities abd their periodic for allowing person inside
the area where goods are kept.
• In addition, External security
• Goods can be anything which belongs to premises.
Auditing & Assurance

• Defalcation of cash:
• 1) Inflating cash payments
• Making payment against fictitious voucher.
• Manipulating totals of the accounts
• showing more quantities of goods
• adding wage of dummy worker
Auditing & Assurance

• Suppressing Cash Receipts:

• changing in the receipts of the cash known as suppressing of cash
receipts.
• 1) Adjusting unauthorized or fictitious rebate allowance etc to customers
account and misappropiating amount paid by them
• 2) Not entering fully cash sales of the organzation.
• 3) Teeming and Lading
• Show the transaction after some days when another payment is
received to prevent detection of misappropiation of cash.
Auditing & Assurance

• Costing wrong amount in the Books of Account:

• For example: The sales for 1000 quantity for Rs 10 each will
be 10,000 but the management will show 1200 quantity for Rs 10
each to commit fraud.
• the actaul purchase will be 5000 unis and company will show
more units at higher price.