Financial Statement Fraud Schemes Essay

727 Words Aug 5th, 2013 3 Pages
Financial Statement Fraud Schemes
While evaluating Apollo Shoes, there are some areas of concern that are potential fraud schemes. Fraud can lead to the entire collapse of a company if not corrected, and will also affect share value and investor confidence. This paper provides an overview of the process of investigation along with recommendations for the company.
As with any company, revenue recognition is an important part of operations for Apollo Shoes. Generally accepted accounting principles (GAAP) requires revenue generated to be realistic and recognizable. Revenue is recognized when a sale is completed, and the sale is completed when it has been paid for, and the product is handed to the customer or mailed to the desired
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The same charges could also have been applied for routine maintenance, which would show the expense twice.
Apollo shoes was affected by a recent hurricane and the potential of charges being posted in renovation and routine maintenance.
The invoices for system analysis consulting with Professor Josephine Mandeville of $200,000 needs to be examined and clarified. This seems to be high for evaluation and should not be included in the capitalization policy if it occurred after the conversion date. This will impact the expenses of the company in the short term and the long term.
Depreciation schedules need to be evaluated in regard to the life of the equipment and the type of depreciation utilized. The assets need to be monitored for compliance with GAAP. Assets need to be re-evaluated for value and life expectancy for depreciation and book values.
Inventory
Items that stand out are the standing inventory that is of uncommon sizes and long-standing boxes which were on pallets. The obsolescence reserve seems to be almost the total inventory for the Siren shoes. The men's spotlight size 23 shoes in the warehouse need to be eliminated from the inventory and destroyed or removed. The tracking process for inventory needs to be counted by employees that are not involved with ordering and recording the items on the books. Better use of the inventory tracking system needs to be pursued for future training and or implementation for
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