Asset Misappropriation Schemes Flashcards

Which of the following scenarios best illustrates a 'fictitious refund' scheme at a retail company?

Answer: A cashier processes a refund for merchandise that was never returned and pockets the cash

A fictitious refund scheme involves processing a return transaction for merchandise that was not actually returned, generating cash that the employee steals.

A company discovers that its petty cash fund consistently requires reimbursement more frequently than expected. The most likely fraudulent explanation is:

Answer: The fund custodian is making unsupported disbursements and pocketing cash

Frequent, unexplained depletion of petty cash beyond normal usage patterns is a classic indicator of the custodian stealing from the fund.

Under the ACFE Fraud Tree, which of the following is classified as a 'fraudulent disbursement' scheme?

Answer: Submitting fictitious expense reimbursement claims

Fraudulent disbursements involve causing the company to issue payments through legitimate-appearing channels, such as reimbursing fabricated personal expenses.

An examiner reviewing accounts receivable finds several large balances that have been written off as uncollectible, all approved by the same accounts receivable clerk. What fraud scheme should be suspected?

Answer: Skimming with write-off concealment

Writing off a customer's balance as bad debt after pocketing their payment is a common concealment technique that removes the evidence of the original theft.

Which of the following internal controls is specifically designed to prevent check tampering?

Answer: Storing blank checks in a locked location accessible only to authorized personnel

Restricting physical access to blank check stock prevents unauthorized individuals from writing or altering checks payable to themselves.

A fraud examiner is analyzing expense reports and finds that an employee consistently submits meal receipts just below the $75 threshold that requires a detailed business purpose justification. This pattern most likely indicates:

Answer: The employee is structuring expenses to avoid required documentation controls

Consistently submitting amounts just below a control threshold is a structuring technique that signals awareness of the control and deliberate avoidance of its requirements.

Which of the following represents the strongest evidence that a ghost employee scheme has been occurring?

Answer: A payroll record with no corresponding HR personnel file, time records, or tax withholding history

A ghost employee has no supporting HR documentation, no verifiable work history, and no legitimate employment records because they do not actually exist.