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ch 6 notes - PRINCIPLES OF FRAUD EXAMINATION Lecture...

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PRINCIPLES OF FRAUD EXAMINATION Lecture Outline Chapter 6 – Payroll Schemes Payroll Schemes – are occupational frauds in which a person, who works for an organization, causes the organization to issue a payment by making false claims for compensation. A. Ghost employees – refers to someone on the payroll who does not actually work for the victim company. 1. Adding the ghost to the payroll – opportunities exist in: a. Personnel department – those with hiring and supervisory authority b. Payroll accounting i. create a fictitious employee with a name very similar to that of a real employee ii. failing to remove the names of terminated employees 2. Collecting timekeeping information – the key to this stage of the fraud is obtaining approval of the timekeeping document. a. supervisor is the fraudster b. non-supervisor is the fraudster 3. Issuing the ghost’s paycheck - the perpetrator does not generally take an active roll in the issuance of the check.
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