Post-Conference
Auditing and Investigating Fraud
Seminar
Auditing Track
Asset Misappropriation Schemes
Asset Misappropriation Schemes
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Cash schemes
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Theft of cash receipts
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Fraudulent disbursements
Inventory/other assets
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Misuse
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Larceny
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Theft of Cash Receipts
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Skimming
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Sales
Receivables
Cash larceny
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From the register
From the deposit
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Detection of Theft of Cash Receipts
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Analyze sales accounts by employee.
Review journal entries.
Compare dates of customer payments with
dates payments are posted to accounts.
Analyze cash receipts and their recording.
Analyze the relationship between sales, cost
of sales, and returns and allowances.
Watch for altered register tapes.
Follow up on complaints and inquiries from
customers.
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Fictitious Disbursements
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Check tampering schemes
Billing schemes
Register disbursement schemes
Expense reimbursement schemes
Payroll schemes
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Check Tampering Schemes
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Forged maker schemes
Forged endorsements
Altered checks
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Detection of Check Tampering Schemes
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Investigate customer complaints.
Investigate missing canceled checks.
Investigate past due notices received.
Review unusual endorsements on checks.
Review unusual payee names.
Conduct analytical reviews.
Reconcile checks using a positive pay system.
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Billing Schemes
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Personal purchases with company funds
False invoicing
Altering existing purchase orders/requisitions
Returning merchandise for cash
Related-party businesses
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Detection of Billing Schemes
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Search for:
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Vendor addresses that match employee
addresses
• Unusual activity in “soft” accounts
• Increased payments to certain vendors
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Perform site visits of vendors.
Investigate noticeable changes in an
employee’s lifestyle.
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Detection of Billing Schemes
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Conduct analytical reviews.
Review high-volume vendor activity for new
vendors.
Investigate refunds sent to addresses other
than the organization’s permanent address
on file.
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Register Disbursement Schemes
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False refunds
False voids
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Detection of Register Disbursement Schemes
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Account for consecutive sales orders/transactions.
Compare volume of credit memos by period.
Account for missing register tapes.
Investigate voided transactions not properly
documented.
Investigate refunds or voids just under review limit.
Analyze:
• Sales volume by employee
• Voids/refunds by employee
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Expense Reimbursement Schemes
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Fictitious expenses
Altered expenses
Mischaracterized expenses
Duplicate reimbursements
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Detection of Expense
Reimbursement Schemes
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Compare actual and budgeted expenses by
cost center.
Investigate reimbursements over a certain
amount or in even amounts.
Investigate reimbursements charged to
unusual accounts.
Examine accounts that have unusual activity.
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Payroll Schemes
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Ghost employees
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Overpayment of wages
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Detection of Payroll Schemes
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Independent payroll distribution
Analysis of payee addresses or accounts
Search for duplicate employee information
Review of overtime
Analysis of deductions
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Non-Cash Asset Schemes
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Misuse of inventory/fixed assets
Theft of fixed assets
Theft of inventory
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Detection of Fixed Asset Theft
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Perform physical counts of fixed assets,
including computer software.
Analyze depreciation schedules for unusual
patterns.
Compare fixed asset purchases for multiple
years.
Analyze salvage and scrap sales for unusual
patterns.
Review surveillance camera videos, if
available.
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Theft of Inventory
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Methods of stealing inventory:
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Unconcealed larceny
• Fraudulent requisitions and transfers
• Falsified receiving reports
• Fraudulent shipments of merchandise
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Methods of concealing shrinkage:
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Altering inventory records
Recording fictitious sales and accounts receivable
Writing off the missing inventory
Padding the physical inventory
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Detection of Inventory Theft
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Compare cost of goods sold to sales.
Conduct periodic and surprise inventory counts.
Analyze shrinkage.
Compare shipping addresses to employee
addresses.
Reconcile shipments to sales records.
Analyze inventory recorded as scrap.
Analyze inventory balances and entries.
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