Asset Misappropriation Schemes Flashcards

An employee submits expense reports for the same business meal twice using slightly different dates. This is best classified as which type of scheme?

Answer: Duplicate reimbursement scheme

Duplicate reimbursement schemes involve submitting the same expense multiple times, sometimes with altered details to avoid detection.

Which internal control is MOST effective at detecting skimming at a retail point-of-sale?

Answer: Surprise cash counts and register reconciliations

Surprise cash counts compared against register tapes or POS records expose discrepancies created by skimming before cash is recorded.

A purchasing manager creates a fictitious vendor, approves invoices to that vendor, and diverts payments to a personal bank account. Which element distinguishes this from a simple billing scheme?

Answer: The fictitious nature of the vendor

A shell company or fictitious vendor scheme is specifically characterized by the vendor having no real existence, making it a subset of billing fraud.

Lapping is primarily associated with which asset misappropriation category?

Answer: Cash skimming of receivables

Lapping conceals stolen receivable payments by applying later customers' payments to earlier accounts, a classic cash skimming concealment technique.

An employee in accounts payable alters a legitimate vendor's bank account number in the system to redirect payments to her own account. This is an example of:

Answer: ACH/EFT fraud

Redirecting ACH or EFT payments by changing vendor banking details in the system is a form of electronic payment fraud, not check tampering.

Which ratio analysis technique is MOST useful for identifying fictitious employee payments?

Answer: Headcount-to-payroll cost ratio over time

Monitoring the ratio of payroll expense to headcount highlights periods where payroll cost rises without a corresponding increase in employees, suggesting ghost employees.

A warehouse employee steals raw materials and conceals the theft by falsifying inventory count sheets. The ACFE classifies this under which broad category?

Answer: Non-cash misappropriation

Theft of non-cash assets such as inventory or supplies falls under the non-cash misappropriation category of asset misappropriation.