Question

state any five types of frauds that can be found in the audit of fixed assets.

Answer 1

1)Physical Existence of PPE( Property ,Plant and Equipment ): PPE will be recorded in financial statements but wont be available in physical. Physical assets wont match with the schedules of financial statements.whether performed by own staff or Third party and policy regarding periodicity because some time assets are undervalued or over valued and it can be avoided by should be verified by a physical inspection and, or by comparing the particulars of assets as are entered in the Schedule attached to the Balance Sheet, with the Plant or Property Register.
2) Miss-appropriation of assets value :Some times management will show overstatement ,understatement and misclassification of asset value to show strong or weak financial statements
3) Capitalisation of NoN -Asset Expenses :Some time cost without requirements of capitalisation to show strong company performances(EG :Revenue cost sometimes they will capitise)
4)Reorganization of Factitious assets : Fake documents to justify fraudulent Accounting entries to show stronger company performances
5) Personal use of the organization’s assets – use of computers, software and printers for personal use; personal long-distance phone calls; copying personal documents on the organization’s copy machine.
6) Credit card abuse – using the organization’s credit cards for personal use or using the credit card numbers of donors.
7)Frequent changes in accounting policies