Nature of duties of a person who is expected to have committed fraud.
Examine the line of responsibility among the various members of the staff.
Income received from different sources should be scrutinized.
Carbon copies of receipts marked duplicate should be scrutinized.
Examining the record of the small or negligible sources of income such as sales of scrap for the sale of waste paper.
Review of recoveries from customers and secondary parties along with deductions on account of cash discount.
Examine the receipts are serially numbered and all receipts have been accounted for.
In case of canceled receipts, its original copy should be examined and verified.
Inquiries should be made for an unreasonable cash discount.
Cash payments
Ensure that all payments are properly authorized by the competent authority.
Acknowledgment by parties for payments has to be carefully scrutinized and extra care is required where a figure appears to have been erased or altered on such acknowledgment.
Payment by bearer cheques required careful examination.
Payments as regard wages should be examined for possible over-saling of wage sheets and entries regarding dummy workmen.
Payment for goods purchased should be reviewed so as to confirm that no payment has been made in respect of supplies that have not been received.
Any amount paid to partners/directors should be specifically enquired due to the possibility of manipulations therein.
Any outgo as regards salaries and wages from petty cash books should be followed up and the petty cash book itself should be watched and totaled.
Customers’ ledger
Trace the entries in the order book with the corresponding record in the sales day book.
Examine customer accounts to ensure that they have been properly debited at the appropriate amount.
The amounts are written off as bad that should be carefully examined.
Any unusual discount given to them should be thoroughly enquired into and written representation should be obtained from the appropriate authority in this connection.
Attention should be given to the teeming and lading frauds in such accounts.
Balance confirmation from customers should be obtained.
Suppliers’ ledger
The Bought journal should be vouched by reference to the goods inward book.
The amount has been correctly credited in respect of goods duly received or not.
Request the supplier to furnish statements of their accounts to find out whether or not any balance is outstanding or due.
Confirm that allowances and rebates given by them are correctly adjusted.
Stock defalcation
Physically check the quantities in stock and those shown by the stock book.
Cross-checking of good inward and outward registers along with the purchase and sales day book.
