Forensic Accounting Chapter 5

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Unformatted text preview: cash register or petty cash fund and places a check in the till, in case of a surprise cash count. At the end of the day the check is removed. removed. Chapter 5 Forensic Accounting 39 How Is Swapping Checks for Ca$h Caught ? Caught Look for Evidence of: Look Altered Ca$h Counts Missing Register Tapes Missing Unauthorized Credits Unauthorized Void Sales Void Chapter 5 Forensic Accounting 40 Check Tampering Check Altered Payee Altered Forged Endorsement “Washing Checks” Phony checks created on Phony Victim Company’s own check stock stock Chapter 5 Forensic Accounting 41 How Is Check Tampering Caught ? Check Segregation of Duties • Accounts Payable • Bank Reconciliation Check Cashed at a “Check Cashing Store” Check “Check Compare “Payee” To Approved Vendor List Check Security Features • Limited Access to Blank Stock • Special Ink • Watermarks & Holographic Images Chapter 5 Forensic Accounting 42 Check Tampering - Never make a check payable to the I R S Check Number Date Pay to the Order of MI R S Fraudster Seven Hundred Fifty Thousand Ten and 50/100's First National Bank 981 2/26/2004 $750,010.50 Dollars Kenneth Lee Lay Jeffrey Skilling For January Payroll [:0182898111[: 196-752-12121 Kiting Kiting The FBI defines check kiting as: "a scheme which artificially inflates bank account balances, in accounts that are under common control, for purposes of obtaining unauthorized use of bank funds, through the systematic exchanging or swapping of checks between these accounts, in a manner which is designed to misuse the float that exists in the banking system." exists Chapter 5 Forensic Accounting 44 Kiting Kiting A worthless check from Bank worthless Account #1 is deposited in Bank Account #2. Bank Bank #2 immediately credits the deposit. deposit. This allows the Fraudster to This withdraw CA$H or purchase a “Cashier Check” “Cashier Chapter 5 Forensic Accounting 45 How Is Check Kiting Caught ? Check Look for Evidence of: Look Red Flags Generated by Check Kiting Software Software NSF / Returned Checks NSF Frequent Deposits Frequent Many checks issued for large dollar amounts Relationships with Bank employees Relationships Numerous Bank Accounts Numerous Large amount of Bank Service Charges Large Chapter 5 Forensic Accounting 46 How Is Check Kiting Caught ? Check “Check 21” On October 28, 2004 The 21st Century Act - Check 21 took effect. Check 21 may reduce check kiting schemes Check because it is expected to reduce the amount of time it takes for checks to clear through the banking system banking Check 21 is expected to reduce and possibly Check Chapter 5 Forensic Accounting eliminate the float period for clearing checks. 47 Credit Card Schemes A Bust-Out scheme is Bust-Out a situation where a corrupt merchant merchant is processing bogus charges to credit cards without the cardholder’s authorization. the Chapter 5 Forensic Accounting 48 Bust Out Credit Card Schemes • The merchant obtains stolen or The unauthorized cr...
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This note was uploaded on 09/09/2013 for the course ACC 468 taught by Professor James during the Fall '12 term at SIU Carbondale.

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