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There was a forensic assignment question in march 2017 that was not published involving a non-client retailer fraudulently recognising revenue in the form of supplier rebates and placement fees before they were earned. This sounds quite different and more difficult to any of the other forensic questions that have been asked. I was wondering if you could advise me as to how a student could prepare for a similar question coming up as there doesn’t seem to be any other questions like it that one could practice, especially as a forensic question could well come up in June.
Scenarios aren’t overly complicated to make them harder for students. The examining team chooses to publish those Qs & As which they think will be of most help to students and tutors going forward.
I cannot guess what the specifics of a forensic assignment would be and it is the specifics that you have to address.Taking what you’ve written “fraudulently recognising revenue in the form of supplier rebates and placement fees before they were earned”. You know that to deliberately and knowingly recognise revenue before it has been earned would be an example of fraudulent financial reporting – so the only words that could possibly alarm you are “supplier rebates” and “placement fees”.
You should know what a rebate is – so a rebate from a supplier should reduce cost (Cr purchases/expenses) and NOT increase revenue. That leaves only “placement fee” which quite possibly was further explained or at least hinted at in the scenario. If not, every student would have to similarly take a guess. A placement fee is typically used to describe a fee paid to a recruitment agency for hiring an employee – so my best guess is a fee paid by the supplier to the retailer (client in question) for securing other customers for the supplier. How you would “audit” the overstated revenue was clearly only part of the Q and sensible points would have earned marks.
I recommend that you focus on published Qs & As and make sure you have read the 5-parts of the exam technique articles and the one I have “stuck” to this forum.
As there will be only 3 compulsory Qs an “other assignment” question cannot be guaranteed. Trying to question spot is not recommended – not only does this mean you may take too narrow a focus on your revision – but it could really panic you if it’s not there when you open the question paper.
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