Areas where Accounting Fraud can occur:
(a) Revenue and / or Accounts Receivable Fraud:
This happened in the case of Global Crossing, Quest, and others
The most common method of accounting fraud is the manipulating of the company’s revenues and/or accounts receivable.
Various scenario of manipulating revenues and or receivables includes the following:
Revenues:

• recording fictitious revenue ( related parties, sales with conditions, consignment or sham sales),
• recognize revenues too early by having improper cut-off,
• overstating real revenue by altering contracts and inflating the amount, etc)
• omission to record returned goods,
• record returned goods after financial year end closes,
• do not recognize discounts given hence increasing revenue,

Accounts Receivables:

• understate provision for doubtful debts thus overstating receivables,
• not writing off uncollectible receivables or wrote off after financial year end closes,
• record bank transfers or manipulate cash received from related parties as cash received from customers,