Term
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Definition
| A type of fraudulent disbursement that occurs when an employee converts an orgaination's funds by either (1) fraudulently preparing a check drawn on the organization's account for his own benefit, (2) intercepting a check drawn on the organizaion's account that is intended for a third party and converting that check to his own benefit. |
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Term
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Definition
The signing of another person's name to a document (such as a check) with a fraudulent intent, or the fraudulent alteration of a genuine instrument. |
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Term
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Definition
The person who signs a check. |
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Term
What are some of the methods of preventng and detecting forged maker schemes? |
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Definition
1. Safeguard the organization's check stock
2.Overriding controls through Intimidation
3.Third person reconcile the bank statement
4. Good controls
5. Separation of Duties
6. Rotation of Duties
7. Vacations
8. Dual balancing by two employees |
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Term
What are the 5 principal categories of check tampering? |
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Definition
1. Forged maker schemes.
2. Forged endorsement schemes.
3. Altered payee schemes.
4.Concealed check schemes.
5. Authorized maker schemes. |
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Term
What type of fraud is check tampering? |
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Definition
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Term
What is an "Authorized maker scheme"? |
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Definition
A check tampering scheme in which an employee with signature authority on a company account writes fraudulent checks for his own benefit and signs his own name as the maker. Meaning the fraudster is the one who has authority to write the checks and they just start writing checks to themselves. |
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Term
What is the "Universal Problem" in check tampering? |
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Definition
Concealment
If the fraudster cannot hide his crime from his employer, then the scheme is sure to be short lived. |
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Term
What is the best way to stop
Check tampering.
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Definition
Review the canceled checks
for endorsement and payees. |
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Term
In a Forged Maker scheme who is the forged
check made out to? |
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Definition
1.Payable to the perpetrator
2. Payable to an Accomplice
3. Cash
4.Payable to Vendor
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Term
In Fraud Examination
"forgeries" are limited to? |
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Definition
In this text remember that "Forgeries" are constrained to thoses cases in which an individual signs another person's name on a check. |
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Term
What is the first hurdle that a fraudster must overcome in committing a forgery scheme? |
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Definition
Gain access to a check, checks |
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Term
What is difference between "Authorized maker scheme, from other check tampering schemes? |
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Definition
In an Authorized Maker scheme the fraudster has the power to sign the check, therefore it is not a forgery. |
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Term
What is a Forged Maker Scheme? |
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Definition
A forged maker scheme is a check tampering scheme in which the employee misappropriates a check and fraudulenty affixes the signature of an authorized maker on the check. |
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Term
| In the case study of Melissa Robinson, she was able to steal over $60,000 from her employer. Why was she able to commit the fraud without detection? |
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Definition
| She had total control over the accounting records. She forged the signature of another member of the board of directors. No one balanced the accounting records, but her. She had access to all the checks. |
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Term
| What are some ways bland checks can be frauduently obtained? |
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Definition
1. steal the checks, using checks from the bottom of the box, or out of sequence.
2. Produce the checks, on the company computer or at home, or have the checks printed |
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Term
What do Forged endorsement schemes and Altered payee schemes both have in common? |
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Definition
Both involve the theft of outgoing checks that are intended for third parties for some legitimate purpose. |
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Term
| In altered payee schemes, the perpetrator changes the name of the intended third party and negotiates the check himself. This can be done by adding a second payee or changing the original payee's name. What is the best method for detecting this type of fraud? |
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Definition
The person who prepares the checks or payment should not have access to the checks once they have been signed. A third person should always balance the bank statement. |
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Term
What are some of the ways "Forged Endorsement schemes are carried out? |
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Definition
1. The fraudster is involved in delivering the check, and keeps the check
2. Theft of returned checks in the mail room
3. Rerouting the delivery of checks to a new address or payee |
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Term
In the Check Tampering scheme Ernie Philips case $109,000 was stolen through check tampering. How was this scheme accomplished? |
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Definition
He forged boss's name, he was able to use the signature stamp. He took checks out of sequence.He took the bank statements. He had a heated exchange when the manager retrieved some account papers from Ernie's desk. The operations manager discovered a check in Ernie's desk made out to himself.
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Term
What happen to the check tampering fraudster, "What are friends for?" Ernie Philips? |
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Definition
While he was out on bail for the criminal charges against him, he and his family fled.
He was located through an internet search. He lost everything, his house, his CPA license. He died in May of 1996. |
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Term
What are the methods of used to affix a signature to a check. |
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Definition
1. Free-Hand signatures
2. Automatic check-signing instruments
3. Signature stamps |
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Term
Concealing Check Tampering
How do Authorized Maker and forged endorsement schemes and altered payee schemes differ? |
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Definition
Altered payee & Forged endorsement schemes differ because someone has already coded the checks on the accounting records, in authorized maker schemes the fraudster must explain the check on the books themselves.
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Term
What is the main method of
concealing check tampering? |
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Definition
Reconciling the bank statement
Re-Altering the checks
Falsifying the disbursement journal
reissuing intercepted checks
creating bogus supporting documents |
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Term
What makes Check Tampering
different from fraudulent Billing Schemes?
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Definition
In a fraudulent Billing scheme the fraudster submits billing information for payment, and another employee issues the check. In check tampering the fraudster has access to the check and issues the check. |
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Term
What is the order of frequency of
Fraudulent Disbursements
in order
of most frequent to least
frequent |
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Definition
Billing
Expense Reimbursement
Check Tampering
Payroll
Register Disbursement |
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Term
In the Median Loss of Fraudulent Disbursements
in order from highest loss to
least amount |
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Definition
Billing
Check Tampering
Payroll
Register Disbursement
Expense Reimbursement |
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Term
What are the main
topics of the 2nd
Test? |
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Definition
Chapter 5 Check Tampering
Chapter 6 Payroll schemes
Chapter 7 Expense Reimbursement Schemes
Chapter 8 Register Disbursement Schemes |
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