Spotting the red flags of a circular cash-flow fraud
This article warns to be on the lookout for fraud schemes involving the inflation of accounts receivable and sales through the creation of a circular flow of cash through a business to give the appearance of increasing revenue and existence of accounts receivable. The technique can be used to materially overstate assets and inflate borrowing capacity under an asset-based revolving line of credit.
Journal of Accountancy | 12/2009
This story published in CPA Letter Daily on 12/01/2009
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