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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.

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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.