Where is Fraud Likely? - Part 13

The Fraud is not Likely to be Hidden in Miscellaneous Expense 

The crook knows that the auditor is going to analyze miscellaneous expense looking for any significant or unusual transactions.  Therefore, miscellaneous expense is seldom the dumping ground for the fraudulent transaction.  The more intelligent crook will try to bury the fraud in an account with numerous transactions.  Cost of sales is a significant account in many entities and usually consists of many transactions.  Operating personnel familiar with the company’s products and/or services should periodically review what has been charged to cost of sales to determine if items have been erroneously or fraudulently charged.

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