How management incentive system based on sales is risk of fraud but not frequent change in supplies??

Incentives based on sales may make employees to create fictious or book sales to get incentives....so thats a fraud risk factor. They they must have strong internal controls and internal check at every stage of sale transaction

Divya Talluri

CA Inter

★ 140

01-May-20 13:46

Thanks but what about frequent change s in supplies not being risk of fraud when compared to mgt incentive system on sales?

Thread Starter

K.V. Karthik

CA Inter

★ 34K+

01-May-20 17:25

Change of sales may be real right...so that why it is not always treated as fraud risk factor as it depends on n number of environmental factors....this could be fraud risk factor only when there is not genuine reason for uncertain or sudden changes.

Divya Talluri

CA Inter

★ 140

02-May-20 10:18

Sorry but I can't understand your explanation.actually my doubt is why frequent change in supplies is not fraud risk factor?

Thread Starter

K.V. Karthik

CA Inter

★ 34K+

02-May-20 12:06

My last explanation is for that only....its not a fraud risk factor untill reason for such change is not genuine....mean you can't simply say there is fraud as and when there is suddden r frequent changes in sales you need to enquire the reasons because there are chances of fraud but there may r may not really fraud happened. So it is not always a fraud risk factor.

Divya Talluri

CA Inter

★ 140

02-May-20 12:13

Now I understood.Thanks for your explanation.

Thread Starter

K.V. Karthik

CA Inter

★ 34K+

02-May-20 12:34