Asset Misappropriation Flashcards

In a 'pay-and-return' billing scheme, the fraudster typically:

Answer: Overpays a vendor and intercepts the vendor's refund check when returned

In a pay-and-return scheme, the fraudster intentionally overpays or pays a fraudulent invoice, then intercepts and keeps the vendor's refund when the error is discovered.

Which of the following is an example of non-cash asset misappropriation?

Answer: Stealing or misusing company inventory and equipment

Non-cash asset misappropriation involves stealing or misusing tangible assets such as inventory, equipment, or supplies rather than cash or monetary instruments.

A payroll clerk adds unauthorized overtime hours to her own paycheck each pay period. This is best classified as:

Answer: Hours and earnings fraud

Hours and earnings fraud involves falsifying the hours worked or earnings calculations on one's own paycheck, such as adding unauthorized overtime, to inflate compensation received.

An employee 'force balances' the petty cash fund by:

Answer: Creating fictitious receipts to cover cash shortages caused by theft

Forced balancing involves fabricating receipts or supporting documentation to make the petty cash fund appear fully intact despite actual theft of the funds.

An employee uses a company credit card to purchase a personal laptop and codes the charge as 'office equipment supplies.' This is known as:

Answer: Personal purchases scheme

A personal purchases scheme involves using company payment mechanisms—credit cards, purchase orders—to acquire personal items while misrepresenting them as legitimate business expenditures.

Which type of check tampering scheme involves intercepting a legitimately issued check and forging the payee's endorsement to deposit it into an unauthorized account?

Answer: Forged endorsement scheme

A forged endorsement scheme involves stealing a check already made out to the correct payee and forging the endorsement signature on the back to redirect the funds.

Surprise physical inventory counts are primarily used to detect:

Answer: Theft or misuse of physical inventory and supply assets

Surprise inventory counts compare actual physical quantities on hand to recorded book amounts, revealing shortages that may indicate theft or misappropriation of tangible assets.