Matakuliah : F0184/Audit atas Kecurangan
Tahun
: 2007
Audit Procedures for Misappropriation of
Assets
Pertemuan XXIV
Learning Outcomes
• Mahasiswa diharapkan dapat melakukan audit
kecurangan atas penyalahgunaan asset
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Outline Materi
• Audit Procedures for:
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Account Receivable
Inventory
Purchasing and Payroll
Cash
Computer Scheme
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Account Receivable
Typical Fraud:
• Lapping
• Posting bogus credits to the account
• Altering internal copies of invoices
Bina Nusantara
Account Receivable
What to look for:
• Unexplained differences noted by customers on their
account receivable confirmations
• Significant delays between the time when the customer
states a payment was made and the payment was
recorded as received by the company
• A significant number of credit entries and other
adjustments made to the accounts receivable records
• Unexplained or inadequately explained differences
between the accounts receivable sub ledger and general
ledger
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Account Receivable
Example Audit Procedures:
• Confirm the account activity not just the balance with the
customer directly
• Perform analytical reviews of credit memo and write off
activity
• Vouch credit memos and other write offs to all related
supporting documentation
• Investigate all differences between the payment date
reported by the customer and payment date recorded by
the company
• Analyze recoveries of written off accounts
• Check the nature of aging and who has the access to
that
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Extended Audit Procedures
Misappropriation of Assets
Account Receivable
Typical Fraud
1. Common technique for this fraud are:
– Lapping. Used another customer payment
– Posting bogus credits. Posting credit memo or other non cash
reduction
– Altering internal copies of invoice. Reporting lower amount than
actually billed
2. Closed an account with an overdue receivable
3. Mutual arrangement between customer and employee
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What to Look For
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Difference on account receivable confirmation
Delays between customer payment and company record
Credit entries and adjustment to account receivable record
Difference between account receivable subsidiary ledger and
general ledger
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Bina Nusantara
Example Audit Procedure
– Confirm account activity to customer directly
– Perform analytical reviews of credits memo and write-off activity
– Vouch credits memo and other write-offs
– Check the different payment date between customer and company
record
– Analyze recoveries of written-off accounts
– Understand how account receivable aging and who is/are
responsible for it
10
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Extended Audit Procedures
Misappropriation of Assets
Inventory
Typical Fraud
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For personal use.
Small, easy to steal and valued by employee as a customer
For sale.
Steal from the receiving docks before physical custody
Coalition between receiving and vendor’s delivery personnel
Theft of scrap
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What to Look For
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Large difference between physical and inventory records
Unusual increase in inventory turnover
Unusual entries in inventory records
Key inventory ratios
Shipping documents without corresponding sales documentation
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Bina Nusantara
Example Audit Procedure
– Analyze inventory shortage, compare key inventory ratios, look for
unusual condition
– Review receiving report
– Review supporting documentation for reduction to inventory record
– Compare between shipping and corresponding documents
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Extended Audit Procedures
Misappropriation of Assets
Purchasing and Payroll
Typical Fraud
1.
2.
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3.
Payment of invoices to a fictitious company
Coalition between vendors to company’s purchasing agent
Allow vendor submit fake / false billing and approving payment
Excess purchasing of property or services
Bid-rigging
The use of ghost or terminated employee
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What to Look For
1. Fictitious vendors
Tampered or photocopied invoice, same invoice number, P.O. box
and no phone number company, same address and or phone
number with employee, suspicious vendor names
2. Kickbacks
Aggressively handle all matters related to vendor, no apparent
business company, vendor frequent visit to employee, high price
from particular vendor, low quality of goods or services, no formal
bid process
3. Ghost employee
Employee with duplicate address, checking account, no withholding
taxes, no insurance
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Bina Nusantara
Example Audit Procedure
– Review invoice and look for evidence of tampered
– Search for suspicious vendor (duplicate address, etc)
– Matching between vendor and employee address
– Sorting invoice for unusual pricing and volume trends
– Review invoice and examine supporting document
– Search payroll records for duplicate address or bank account
– Review personnel files and look for person with little or no evidence
of activity
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Extended Audit Procedures
Misappropriation of Assets
Cash
Typical Fraud
1.
2.
3.
4.
Withdraw cash directly for their own benefit
To pay personal expenses
Skimming. Cash is taken before entering system
Substituting personal checks for cash. Take money and substitute
with personal checks
5. Fictitious refunds and discounts.
6. Altered credit card receipts. Usually restaurant where he or she or
they intent to increase the tip on credit card receipt
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What to Look For
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Large reconciling items in bank reconciliation
Bank statement didn’t include cancelled checks
Missing cancelled checks
Unsupported disbursement
Customer complaints
Altered or missing cash register tapes
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Example Audit Procedure
– Examination of bank reconciliation
– Review bank statement and cancelled checks
– Obtain bank cut-off statement
– Search and examine unusual expense account activity close to the
end of accounting period
– Surprise cash account
– Analyze sales discount and returns
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Extended Audit Procedures
Misappropriation of Assets
Computer Schemes
Typical Fraud
1. Entering false transaction
2. Entering bogus file maintenance transaction
3. Failure to enter legitimate transaction or file maintenance
instruction
4. Altering input data
5. Bogus instruction
6. Siphoning funds
7. Direct manipulation of accounts
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What to Look For
1. Inability to process computer application
2. Differences in batch or hash totals
3. Undocumented or unauthorized account posting, file changes, or
modifications to program
4. Differences between general ledger and computerized accounting
records
5. Lack of segregation of duties
6. Lack of logical access
7. Lack of adequate computer processing controls
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Example Audit Procedure
– Reviews documentation supporting
– Review control over input and processing of financial transactions
or file maintenance procedures
– Reconstruct accounts or files from original source documents
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