An unexplained increase in uncollectible accounts receivable may be a warning sign of a non-cash asset misappropriation scheme involving false shipments of inventory.

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An increase in uncollectible accounts receivable may be a sign of a scheme where false shipments of inventory are made to make it appear that sales have been made, but in reality, the inventory is being either stolen or diverted. This scheme can lead to inflated accounts receivable balances that turn into bad debt write-offs.

An Unexplained Increase in Uncollectible Accounts Receivable May Be a Warning