By a ratio of 8:1, employee “tips” identify far more abuses than internal control reviews, such as Sarbanes-Oxley Section 404 activities.
Is there an effective employee “hotline” service in place?
Have controls been reviewed from the top down or from the bottom up?
What are the executive incentives for achieving certain results?
What are loan/debt covenant terms that need to be achieved?
Are there transactions between the company and related parties?
Are receivables growing much faster than revenues?
Are reported inventories growing faster than physical inventories?
Are there any unusual upticks in revenue at the end of the reporting period?
Have the terms of sale (credit, returns, payment terms) been altered recently?
Are asset values legitimate?
Have expenses been capitalized to asset accounts?
Are the assets economically viable? Is there an expected ROI?
Are there any revenues attributable to “bundled” services or “channel stuffing”?