Asset Misappropriation Schemes Flashcards

A cashier voids a legitimate sale transaction after collecting payment from the customer and pockets the cash. This is BEST described as:

Answer: Voiding and cash theft (larceny)

Voiding a legitimate transaction after collecting cash and stealing the proceeds is a form of cash larceny because the sale was recorded before being reversed.

Which of the following scenarios represents a 'fictitious refund' scheme?

Answer: A manager approves refunds for returns that never occurred and routes the cash to herself

Fictitious refund schemes involve employees generating fraudulent refund transactions for non-existent returns and diverting the cash or credit to themselves.

An employee misappropriates company funds over three years before detection. The ACFE data shows that longer-duration schemes tend to cause:

Answer: Larger median losses than schemes detected quickly

ACFE research consistently shows that fraud schemes lasting longer cause significantly higher median losses because the fraud compounds over time before detection.

A payroll clerk adds a deceased employee to the payroll for two months after death, depositing checks into a joint account. This is BEST classified as:

Answer: Ghost employee scheme

Continuing to pay a deceased employee without authorization creates a ghost employee—a fraudulent payroll record for a person who cannot work.

Which of the following is the PRIMARY reason asset misappropriation schemes are so prevalent compared to other occupational fraud categories?

Answer: They are the most numerous and accessible to employees at all levels

Asset misappropriation is the most common fraud category because opportunities exist at virtually every organizational level wherever employees handle cash, inventory, or other assets.

A company implements a hotline allowing anonymous reporting of suspected fraud. According to the ACFE, this control primarily reduces fraud by:

Answer: Deterring fraud through fear of detection

Fraud hotlines deter potential perpetrators by increasing the perceived likelihood of detection through peer reporting, which is the primary preventive mechanism.

Which document comparison would BEST help detect an altered payee check tampering scheme?

Answer: Comparing original check images from the bank to the amounts in the cash disbursements journal

Retrieving original cancelled check images and comparing payee names and amounts to recorded disbursements reveals alterations made after a check left the organization.