Opportunities Checklist
IMPROPER REVENUE RECOGNITION
1.
General factors tending to indicate premature revenue recognition
2.
Accounts receivable indicators
3.
Side letters with customers and others
4.
Early delivery of product

Delivery of a product prior to customers' readiness to accept

Shipment of unfinished products

Partial shipments

Shipments with upfront fees

Recognizing revenue before full performance has occurred under a contract requiring multiple deliverables
5.
Channel stuffing
6.
Backdating of agreements
7.
Backordered sales
8.
Bill and hold arrangements
9.
Agreements or policies which grant liberal return, exchange or refund policies
10.
Contingent sales
11.
Recording fictitious transactions
12.
Sham related party transactions
13.
Other sham transactions or products shipped for trial or evaluation purposes
14.
Holding the books open for extended time after period end to include additional sales
15.
Reporting revenue based on gross sales
16.
Recognizing revenue from installment sales prior to the appropriate period
17.
Percentage of completion accounting
18.
Round-tripping
19.
Misclassification of unusual, extraordinary, and nonrecurring gains as income from continuous operations
20.
Over-accrual of rebates receivables due from vendors
ASSET OVERSTATEMENT / LIABILITY UNDERSTATEMENT
INVENTORY
1.
Fictitious inventory
2.
Manipulation of inventory counts
3.
Improper valuation
4.
Fraudulent or improper inventory capitalization
RECEIVABLES
5.
Fictitious receivables
6.
Related party receivables
7.
Inadequate reserves or failure to adequately recognize bad debts or impairment of receivables
8.
Tax receivables
INVESTMENTS
9.
Improper valuation
10.
Fictitious investments
OTHER ASSETS
11.
Improper capitalization of expenses as costs of fixed assets to increase the value of assets in the books and
records
12.
Fictitious fixed assets
13.
Manipulation of fixed asset valuations
14.
Fictitious accounts
15.
Schemes involving depreciation/amortization
16.
Goodwill and other intangibles
LIABILITIES
17.
Understating expenses or concealing liabilities and schemes related to capitalization of costs
18.
Off balance sheet entities
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ASSET MISAPPROPRIATION
CASH
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
PAYROLL
13.
14.
15.
16.
Cash skimming: unrecorded sales or receivables
Cash skimming: theft of cash receipts
Cash skimming: understated sales or receivables
Lapping (converting a customer payment and then using subsequent customer payment to cover the previous
customer’s account)
Fraudulent disbursements: creation of fictitious vendors by an employee or suing shell companies to:

Convert monies by having the shell bill the entity for goods or services it does not receive, or

Purchase goods or services, which are then marked up and sold to the employer through the shell.
Fraudulent disbursements (Disbursement of company funds including the issuance of false credits, refunds,
rebates and bribes to legitimate vendors for which the employee receives a kickback)
Fraudulent disbursements: over-billing schemes (Schemes wherein the paying employee with the aid of a sub
contractor or supplier, adds an illegal payment to a legitimate business expense or trade payable. The third
party then forwards the excess payment to the intended recipient or returns it to the payer.)
Fraudulent disbursements: pay and return schemes (Schemes where an employee improperly pays a vendor
or pays a vendor for an invoice twice. The employee then calls the vendor and requests that the improperly
issued or duplicate check be returned. The employee then intercepts the incoming check and cashes it.)
Fraudulent disbursements: check kiting
Fraudulent disbursements: theft of company checks and check tampering
Fraudulent disbursements: Expense report schemes
Personal purchases
Payroll fraud: fictitious employees (creating fictitious employees on the payroll and converting the pay checks
issued to such employees)
Payroll fraud: falsified sales or hours
Payroll fraud: falsified wages
Payroll fraud: workers’ compensation
INVENTORY
17.
Theft of inventory
18.
Misappropriation of Inventory: False Sales, Write-Offs and Other Debts
FIXED ASSETS
19.
Theft of fixed assets
REVENUE AND ASSETS OBTAINED BY FRAUD
1.
Fraud against the government or customers
2.
Antitrust
COSTS AND EXPENSES AVOIDED BY FRAUD
1.
Fraud against suppliers or employees
2.
Environmental, Health and Safety violations
3.
Improper labour practices
4.
Tax fraud
5.
Money laundering
EXPENDITURES AND LIABILITIES FOR AN IMPROPER PURPOSE
1.
Payments to government officials (FCPA bribery, FCPA violations)
2.
Illegal political contributions
3.
Commercial bribery
FINANCIAL MISCONDUCT BY A MEMBER OF SENIOR MGMT OR THE BOARD
1.
Use of corporate assets to commit illegal conduct
2.
Insider trading
3.
Unauthorized compensation
4.
Failure to pay taxes
5.
Travel expense fraud or abuse
6.
Receipt of free or below market goods and services from vendors, suppliers, etc.
7.
Related party transactions
8.
Conflicts of interest
9.
CV and Academic deception
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