Fictitious Inventory Write-Off
Definition
A journal entry that reduces the recorded inventory balance under a legitimate category (obsolescence, spoilage, shrinkage) without an actual loss of stock. The recorded reduction either conceals a prior theft or directly generates a credit that the fraudster converts to cash.
Related terms
- Commission Manipulation
- Inflating the value, volume, or classification of sales transactions to generate a larger commission payout. Methods include recording fictitious sales, misclassifying non-commissionable...
- Ghost Employee
- A fictitious or terminated worker whose record remains active on the payroll master file. Wages are disbursed under that record and diverted...
- Headcount Reconciliation
- A detection procedure that cross-references every record on the payroll register against HR personnel files, building access records, and direct management confirmation....
- Inventory Shrinkage Rate
- The ratio of inventory loss (the difference between book inventory and physical count) to total inventory, expressed as a percentage. Comparison of...
- Timesheet Fraud
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Explained in
- Payroll and Inventory Fraud SchemesA journal entry that reduces the recorded inventory balance under a legitimate category (obsolescence, spoilage, shrinkage) without an actual loss of stock. Th...