Asset Irregularities

Topics: Generally Accepted Accounting Principles, Asset, Balance sheet Pages: 4 (887 words) Published: October 20, 2012
Substantive Procedures for Asset Irregularities
Student Name
ACC 556
September 17, 2012
Instructor Name


The following will outline the procedures and steps necessary to detect irregularities that can occur in the accounts receivable, inventory and fixed assets of Apollo Shoes. The flowcharts will show how the use of internal controls is integral to the overall success of the organization. In the accounts receivable, the sales and billing processes are an area that would require attention. With the inventory representing a large portion of the assets at Apollo Shoes, special attention should be spent on the internal controls in that area. However, there also has to be emphasis on the fixed assets, such as vehicles, land, buildings, and the machinery required in the overall business operation. The sections that follow will provide a summary of the processes that are required to detect irregularities in those areas.

Accounts Receivable
Accounts receivable fraud typically begins with errors within the billing process and can be examined by taking a sample of customer accounts receivable records and reviewing the original sales information to the customer balances. This process will uncover phony customers and receivables meant to strengthen the company financial statement. The sales and billing process must be precise for the accounts receivable to be correct (Wells, 2011). Another issue when the billing is corrected is the theft of the payments received on customer accounts. The theft normally occurs between several customer accounts where the first payment is taken and the next customer’s payment is applied to the first and the cycle continues. To keep this fraud activity going, it takes good record keeping; however this can be exposed quickly if proper customer records are kept and evaluated on a regular basis will be exposed quickly. Discounting can be another area for fraudulent activity within the accounts receivable...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Audit of Fixed Assets Essay
  • Acquisition of Non-Current Assets and Entities Essay
  • Classification of Assets and Liabilities in a Balance Sheet Essay
  • Assets, Liability, Owners Equity and the Accounting Concepts Essay
  • Asset Liability Mgmt Policy Review Work Program 1 Essay
  • Outlook Towards Maintenance of Liquid Assets to Ensure That Adequate Cash in Hand Is Available. Essay
  • Current Assets and Noncurrent Assets Essay
  • Fixed Asset Essay

Become a StudyMode Member

Sign Up - It's Free