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Why are receivables and revenue ripe areas for abuse or outright fraud? Income tax rules have been adjusted in recent years to make it easier to hide revenue from credit sales. SEC rules have been adjusted in recent years to make it easier to hide revenue from credit sales. No real event, such as the receipt of cash, is necessary to record a debit to Accounts Receivable and a credit to Revenue. Generally accepted auditing standards do not allow auditors to scrutinize the detailed records of credit sales.

Why are receivables and revenue ripe areas for abuse or outright fraud? Income tax rules have been adjusted in recent years to make it easier to hide revenue from credit sales. SEC rules have been adjusted in recent years to make it easier to hide revenue from credit sales. No real event, such as the receipt of cash, is necessary to record a debit to Accounts Receivable and a credit to Revenue. Generally accepted auditing standards do not allow auditors to scrutinize the detailed records of credit sales.

Contemporary Auditing
Contemporary Auditing
11th Edition
ISBN:9781337650380
Author:KNAPP
Publisher:KNAPP
Chapter2: Audits Of High-risk Accounts
Section2.6: Cbi Holding Company, Inc.
Problem 2Q
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Why are receivables and revenue ripe areas for abuse or outright fraud? Income tax rules have been adjusted in recent years to make it easier to hide revenue from credit sales. OSEC rules have been adjusted in recent years to make it easier to hide revenue from credit sales. No real event, such as the receipt of cash, is necessary to record a debit to Accounts Receivable and a credit to Revenue. Generally accepted auditing standards do not allow auditors to scrutinize the detailed records of credit sales.
Transcribed Image Text:Why are receivables and revenue ripe areas for abuse or outright fraud? Income tax rules have been adjusted in recent years to make it easier to hide revenue from credit sales. OSEC rules have been adjusted in recent years to make it easier to hide revenue from credit sales. No real event, such as the receipt of cash, is necessary to record a debit to Accounts Receivable and a credit to Revenue. Generally accepted auditing standards do not allow auditors to scrutinize the detailed records of credit sales.
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