Part 1: Asset Misappropriations.
The introductory part of this chapter gives the reader an overview of what costs is incurred by organizations. The introduction is seen to be helpful in steering the reader forward into reading the chapter with a focused mind on what fraud and abuse entails. The chapter looks at costs incurred by organizations when producing and selling their products and or services. These costs are known to run the scale that includes fraud and abuse plus taxes, raw materials, and occupancy among others (Wells, 2007). Most instances, organizations report fraud and abuse in their profit and loss figures, but the costs incurred are hidden. Different fraud and abuse cases are presented to further help in clarifying how costs of occupational fraud are measured. Moreover, the perpetrators of the fraud are mentioned and their effects displayed.
The hidden costs are what the author looks into as misappropriation of funds. In the book, the most misappropriation of the asset within corporations is the most common type of fraud presented. In reality, asset misappropriation occurs when company assets are being either misused or stolen. In the current business world, the white-collar crimes are widely known and press releases look into such crimes because they are more pronounced in the current global marketplace and workplace (Wells, 2007). In the real world examples, cash receipt frauds are evident and asset misappropriation is detected mainly through monitoring of employee activities in the organization. Other common techniques employed in preventing asset misappropriation in the book include the segregation of duties, examination of documentation, conducting surprise audits, job rotation and the examination of canceled checks. Reading the chapter enables readers to identify the common asset misappropriation schemes available and their warning signs. Secondly, the chapter helps readers to detect and prevent the misappropriation of assets to enable the organization to reduce their losses through such fraudulent schemes.
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Skimming is defined as the removal of cash from an accounting system before it enters and seen as “off-book scheme.” Ideally, the cash receipt of the entity is never reported in company books. In the current globalized world, such occurrences are many and differ as others are sales schemes (understated and unrecorded sales), accounts receivable schemes (lapping and write-off schemes) and refund plus other schemes. Such an introduction gives an overview of the kind of business that goes behind the scenes of any organization (Wells, 2007). It is evident that shareholders of any given company are unaware or aware of such unethical practices but due to the high living standards, many are forced to engage in such activities. Nonetheless, countermeasures are provided that steer a company towards attaining their initial goal that meets all the needs of their shareholders.
Cash larceny translates down to stealing from a company after recordings have been made and this implies that they are on-book frauds. Most instances such fraudulent activities are conducted by accountants of a given company and other people in the managerial positions. Register disbursement schemes are those that appear in the accounting records as legitimate but in reality, they are an occupational fraud. It is considered hybrid because it is between cash theft and fraudulent disbursements (Wells, 2007). Practically, the employees take cash from the registry, goes with it, and include false refunds and false voids.
Billing schemes are common fraudulent activities performed by people in organizations through the purchase of non-existent goods and services or the overpricing of some items. The goods in question may also not be needed by the organization and this result in the illicit of cash gains or even goods and services. Billing schemes are there for one to generate cash and this will mean that individuals will go to the extent of providing false documentation (Wells, 2007).
Check tampering is an act of fraudulent disbursement scheme where the perpetrators of the act are doing it for their own benefit. In such instances, it is known that the perpetrators use physical control of a given check and then false information is placed on the instrument. In some instances, the victim may opt to forge a signature, the amount of the check, alter the payee or even go to the heights of forging an endorsement (Wells, 2007). In this fraudulent activity, the idea is by placing false information on the check and thus, acquires the funds that were meant for his or her employer.
The other type of false documentation done in an organization is the false payroll and expense reimbursement. Such activities are done by people who have ill motives when it comes to the success of the organization. As such, having such schemes at play lowers the integrity of people handling cash for the business because they are looking at their own intentions. This chapter looks at how such instances can be avoided and detected in time to save the company from going through direct forms of fraud that affect the image of the organization (Wells, 2007).
Inventory and other assets look at theft from a different angle where victims will use the word ‘borrowed,’ but in reality, it means something else. Such instance where inventory being borrowed is converted for personal use has resulted in people using company assets to meet their own goals. Such instances have led to wear and tear on the asset because it has been exposed to rigorous activities not aligned with company goals. Therefore, it gives readers an overview of what can be done to reduce such happenings in the future of the company.
Reference
Wells, J. T. (2007). Corporate fraud handbook: Prevention and detection (2nd ed.). Hoboken, New Jersey: John Wiley & Sons, Inc.
