Shipping Costs and Inventory Fraud Are you at risk for inventory fraud? A simple evaluation of shipping costs relative to sales over time could indicate a greater risk for inventory fraud (Bell, 2009). SHIPPING COSTS % Definition: Shipping costs expense divided by total sales: (Shipping Costs Expense) / (Total Sales) Measurement Unit: % Measures: The relationship between shipping costs and sales. Fraud Indicator: An increase is a red flag for early delivery and bill & hold schemes. A decrease could indicate fictitious revenue. Fraud Red Flag: Increase : Revenue recognition: Early delivery scheme Increase : Revenue recognition: Bill & hold scheme Decrease : Revenue recognition: Fictitious revenue References Bell, A. … Read More
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