Cash Schemes:
Incoming cash – An “off-book” system may be used where cash received into the business isn’t recorded, or is accounted for with a fictitious disbursement. Skimming – Taking the cash before it’s ever entered into the accounting system. One example cited at the seminar involved a grocery store where the manager installed an extra register for “cash only” sales, then pocketed the money himself. Other store employees turned in paper work for that register, not realizing the manager simply discarded it.
Altered receipts – Credit card receipts are subject to alterations especially in the restaurant business, where the wait staff may increase the tip on the credit card receipt.
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Fraudulent Disbursements:
Fictitious refunds and discounts – Employees may ring up a refund, even though nothing was returned, or give unauthorized discounts in the accounting system, yet charge the higher price to the customer.
Check tampering – Involves an employee either preparing a fraudulent check for his own benefit, or intercepting a check intended for a third party.
Falsified expense reports – May be for totally fictitious expenses, alteration of genuine receipts, or reimbursement requests for personal expenditures.
Ways to Detect Cash Schemes
* Investigate customer complaints.
* Review past expenses and compare them to current expenses to identify unusual patterns.
* Review chargebacks to accounts that weren’t budgeted, or increased activity in accounts at the end of an accounting period.
* Require positive identification of check payees. For instance, companies should occasionally do a manual distribution of paychecks.
* Look for duplicate addresses and bank accounts for payees.
* Check for duplicate Social Security numbers.
* Investigate missing canceled checks, unusual endorsements, checks that were written out of sequence.
* Investigate past due notices received by your company, particularly if the company has a history of paying its bills in 30 to 60 days and it gets notice the bill has not been paid in that period of time.
Source: The Association of Certified Fraud Examiners
