Accountant

Recognizing unusual transactions

As an accountant, you are familiar with the practices within your line of business. Whether a transaction is considered unusual depends largely on your professional judgment. Your professional judgment is consistent with what is considered unusual within your profession. In addition to your judgment, there are situations that are unusual by nature and should therefore be reported.

If a situation arises as described in the examples below (not exhaustive), this is a reason to further examine whether the transaction could be related to money laundering, terrorist financing, and/or associated predicate offenses. It is not necessary to determine with certainty that the above-mentioned crimes have been committed. You merely need to have an assumption that the transaction can be related to one of these crimes.
If you believe that the transaction could be related to money laundering, terrorist financing, and/or associated predicate offenses, you are required to report this under the subjective indicator.

Red flags – Accountant

• A transaction involving the client leads to a result that is significantly higher or lower than can reasonably be expected; or if the transaction leads to an unusually high result compared to similar companies in the sector in which the client operates, especially if a significant portion of the turnover consists of cash sales
• There is an inexplicable difference between cash flow and the flow of goods
• A client achieves unusual high revenues / or profits and the activities to which they relate are not clear.
• A transaction involving a client takes place under worse terms and conditions than could reasonably be expected, without an acceptable explanation as to why a better structure was not chosen
• The content of the annual financial statement does not match the underlying documents
• Unauthorized transactions or incorrectly recorded transactions
• Administrative systems, either intentionally or by design, do not provide an appropriate option to track transactions or provide adequate evidence. Payments for services provided that seem too high when considering the services provided
• Commissions and/or other similar incomes that appear too high; payments for unspecified services or loans to consultants, affiliates, employees, or government personnel
• There is no compliance with the publication obligation or the legal obligation – if applicable – to obtain an auditor’s report for the annual financial statement
• A-typical insurance premium advances
• Insurance policies with premiums that exceed the buyer’s financial resources
• Insurance policies with values that do not match the buyer’s needs