Questions and Answers
What are the two categories of asset misappropriations?
What is skimming?
The theft of cash from a victim entity prior to its entry in an accounting system.
Skimming schemes can be subdivided based on whether they target sales or receivables or refunds.
True
In cash register manipulation, a 'no sale' transaction is recorded in which scenario?
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In the case of unrecorded sales skimming, an employee might _____ to conceal the theft.
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Give an example of cash register manipulation.
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After hours sales are conducted _____ without the knowledge of the owners.
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What is an example of a job that does not require direct supervision and might allow skimming?
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What leads to poor collection procedures?
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How does an employee understate the amount of sale?
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Study Notes
Asset Misappropriations
- Subdivided into two main categories: cash misappropriations and non-cash misappropriations.
Skimming
- Refers to the theft of cash before it gets recorded in an accounting system.
- Known as "off-book" due to lack of direct audit trail.
- Difficult to detect, making it an appealing scheme for fraudsters.
Patterns of Skimming Schemes
- In sales skimming, employees conduct sales, collect cash, and do not record the transactions, creating no audit trail.
Types of Skimming Targeting
- Skimming schemes can target sales, receivables, or refunds, emphasizing their varied nature.
Cash Register Manipulation
- Methods include recording 'no sale' transactions and rigging cash registers to hide sales from records, avoiding receipt issuance.
Techniques for Pocketing Sales Proceeds
- Options include ringing up 'no sale,' manipulating register tape, not issuing receipts, and destroying store copies.
Concealment Strategies
- Techniques for hiding cash theft involve destroying transaction records, fabricating new records, and creating false statements to mislead stakeholders.
Example of Cash Register Manipulation
- A movie theater manager sold tickets manually, bypassing the automatic dispenser, leading to estimated losses exceeding $30,000.
After-Hours Sales
- Conducted without owner knowledge, creating opportunities for employees to pocket sales before official store operation hours.
Specific Example of After-Hours Sales
- A retail manager opened early to pocket pre-opening sales, destroying register tapes to eliminate any trace of these transactions.
Skimming by Off-Site Employees
- Can involve independent salespeople and employees working at remote locations separated from main business operations.
Jobs Prone to Off-Site Skimming
- Roles include independent salespersons, property managers, and parking lot attendants, with examples of significant thefts.
Impact of Poor Collection Procedures
- Inefficiencies in recording can facilitate skimming, such as a lack of receipt numbering.
Example of Poor Collection Procedure Consequences
- A public housing authority was scammed out of approximately $10,000 due to poor record-keeping of tenant payments.
Understated Sales Skimming Techniques
- Involves entering lower sales amounts, preparing separate receipts, making improper receivable recordings, and fabricating discounts.
Concealment in Understated Sales Skimming
- Similar concealment methods as in other skimming types, including destroying records and fabricating statements.
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Description
This quiz covers essential concepts related to skimming and asset misappropriations. You'll learn about cash and non-cash misappropriations, as well as the definition and implications of skimming. Test your understanding of these important financial fraud topics.
