Risk

1. Credit sales made to customers who represent poor credit risks

2. Unrecorder or unbilled shipments

3. Errors in preparing sales invoices (e.g., showing greater quantities than were shipped or showing unit
prices that are too low)

4. Misplacement of orders from customers or unfilled backorders

5. Incorrect postings of sales to accounts receivable records

6. Postings of revenues to wrong accounting periods, such as premature bookings of revenues

7. Fictitious credit sales to nonexistent customers

8. Excessive sales returns and allowances, with certain of the credit; memos being for fictitious returns

9. Theft or misplacement of finished goods in the warehouse or on the shipping dock

10. Fraudulent write-offs of customers accounts by unauthorized persons

11. Theft (skimming) of cash receipts, especially currency, by persons involved in the processing; often
accompanied by omitted postings to affected customers’ accounts

12. Lapping of payments from customers when amounts are posted to account receivable records

13. Accessing of accounts receivable, merchandise inventory, and other records by unauthorized
persons

14. Involvement of cash, merchandise inventory, and accounts receivable records in natural or human
made disasters

15. Planting of virus (e.g., logic bomb) by disgruntled employee to destroy data on magnetic media

16. Interception of data transmitted between customers and the Website

17. Unauthorized viewing and alteration of other customer account data via the web

18. Denial by a customer that an on-line order was placed after the transaction is processed

19. Use of stolen credit cards to place orders via the web

20. Breakdown of the web server due to unexpected high number of transactions

Exposure
1. Losses from bad debts

2. Losses of revenue; overstatement of inventory and understatement of accounts receivable in the

balance sheet

3. Alienation of customers and possible loss of future sales (when quantities are too high); losses of
revenue (when unit prices are too low)

4. Losses of revenue and alienation of customers

5. Incorrect balances in accounts receivable and general ledger accounts records (e, g., overstatement of
Mary Smith’s balance)

6. Overstatement of revenue in one year (such as the year of premature booking) and understatement
of revenue in the next

7. Overstatement of revenues and accounts receivable

8. Losses in net revenue, with the proceeds from subsequent payments by affected customers being
fraudulently pocketed

9. Losses in revenue, overstatement of inventory on the balance sheet

10. Understatement of accounts receivable, losses of cash receipts when subsequent collection on
written off accounts are misappropriated by perpetrators of the fraud

11. Losses of cah receipts; overstatement of accounts receivable in the subsidiary ledger and the balance
sheet

12. Losses of cash receipts; incorrect account balances for those customers whose records are involved
in the lapping

13. Losses of security over such records, with possibly detrimental use made of the data accessed

14. Losses of or damages to assets

15. Loss of customer accounts receivable accounts data needed to monitor collection of amounts from
previous sales

16. Loss of data which may be used to the detriment of customers

17. Loss of security over customer records resulting in misstatement of accounts receivable baalances

18. Loss of sales revenues

19. Loss of shipped goods for which payments will not be received

20. Loss of sales revenues and alienation of customers