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The Forensic and Investigative Services Practice

Financial Statement Fraud Opportunity Examples

|MISSTATEMENT OF REVENUES (Occurs in 50% of Financial Statement Frauds) |

|Revenue manipulation is one of the schemes commonly employed by management when they commit financial statement fraud. Different types of revenues can|

|be manipulated in different ways. Identifying the different types of revenues present in this client’s operations can help you identify additional |

|opportunities for intentional revenue misstatement. Consider whether the following types of revenues are applicable or not for this client. |

|I. Types of Revenues |

|1. Product sales revenues, including sales of software, by-products and scrap |

|2. Service revenues, including service contract revenues |

|3. Long-term contract revenues, e.g., construction projects, government contracts |

|4. Licensing revenues, e.g., software licenses, intellectual property licensing, merchandise licensing |

|5. Internet portal fees or click revenues |

|6. Royalties, e.g., oil, gas and mineral royalties, patent royalties |

|7. Rental and lease income |

|8. Trading revenues, e.g., revenues...