W3 Fradulent Schemes Report

W3 Fradulent Schemes Report - Fraudulent Schemes Report 1...

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Fraudulent Schemes Report Fraudulent Schemes Report Brandi Murobayashi ACT 375 Joseph Kronewitter March 14, 2011 1
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Fraudulent Schemes Report Fraudulent Schemes Report According to the Association of Certified Fraud Examiners, organizations loose about five percent of its annual revenue to fraud. If you apply that to the estimated Gross World Product, five percent of revenue equals more than $2.9 trillion of global fraud loss (2011). Fraudulent behavior is a growing concern among organizations both big and small. This paper will give a brief overview of the most common types of fraud and give recommendations on developing effective controls that can help to detect and mitigate fraud. Skimming Skimming “is the theft of cash from a victim entity prior to its entry in an accounting system” (Wells, 2008, p. 53). Skimming schemes are known as “off-book” frauds because cash is stolen before it is recorded in a company’s books. Skimming is difficult to detect because the money is never recorded therefore leaving no audit trail. Skimming occurs where money enters the business, any one who deals with the receiving of cash is able to skim money. Skimming schemes can be divided into two categories based on whether they aim at sales or receivables (Wells, 2008). Sales Skimming Sales skimming occurs when an employee makes a sale, takes the customers money, and does not record the transaction. Sales skimming techniques include cash register manipulation, after-hour sales, understating sales, check-for-currency substitutions, and theft in the mailroom (Wells, 2008). The biggest factor in preventing sales skimming is to maintain an oversight presence wherever cash enters the organization. Employees are less likely to steal when there is an oversight presence because of the fear of getting caught (Wells, 2008). Receivables Skimming
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W3 Fradulent Schemes Report - Fraudulent Schemes Report 1...

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