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Revenue leakage for freight forwarding company

MANOHARAN (BRANCH ACCOUNTANT) (39 Points)

07 April 2015

Dear All

Could you please suggest me how can i detect revenue leakage while internal audit in Fright Forwarding and Logistics Company

Regards

mano

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5 Replies

Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 24 April 2015

Hi Manoharan, I may not be able to exactly inform you how to detect revenue leakage, but you can follow the following steps to verify revenue of the company. 1. Logistics companies have a very large part of their dealings in cash. Check system of accounting for cash and its depositing in bank accounts. Also, match the invoices raised with amounts received and deposited; 2. Check whether invoicing rights are centralised or decentralised. If they are decentralised, there are chances of revenue leakage and you need to check the source documents thoroughly, to their origin; 3. Check standard price list of the Company to apply transport charges. If there is no standard price list, that leaves a huge scope for manipulation of invoice value in each individual case and you should recommend to have a standardised price list, depending on size of vehicle, weight of goods being transported and distance travelled; 4. Depending on the above, decide your extent of checking and you can identify cases if there has been any loss of revenue to the Company. Hope this helps you.

Robert (HR Manager) (22 Points)
Replied 28 August 2019

I have almost the same issue during our external audit, They identify a few problems and the first thing that he mentioned is revenue leakage we have a proper check and balance system. How can I find out the problem area we have is a freight forwarding company based in Dubai.