1.

Fraud involving cash

 Skimming – removing cash from the entity before it enters the accounting system, also
an “off-book scheme” because the receipt of the cash is never reported to the entity.
 Currency substitution scheme – the perpetrator of currency converts the incoming
currency and conceals the theft by holding back customer checks and depositing checks
at a later time.
 Larceny – the intentional taking away of an employer’s cash which already appeared on
the victim company’s books without the consent and against the will of employer.
2. Fraud involving receivables and corresponding cash collections
 Check kiting – wherein they use the delay in processing checks (i.e., float period) to take
advantage of an interest-free loan
 Check lapping – Stealing a customer payment and using additional payments from the
customer to cover the theft.
 Skimming sales – involves an employee receiving customer cash, recording the payment
and then charging an expense account. They pocket the money for the same amount of
the expense charge.
3. Fraud involving cash disbursement
 Check tampering scheme – an employee either (1) prepares a fraudulent check for his
own benefit or (2) intercepts a check intended for a third party and converts the check
to his own benefit.
 Billing scheme - attacks the purchasing function of organization by buying goods or
services that are nonexistent, overpriced, or not needed by the organization.
 Expense reimbursement schemes – commonly perpetrated by sales personnel who
overstate or create fictitious expenses in areas such as business travel.
4. Fraud involving inventories and supplies
 Fake sales and/or purchases
 False write-offs –done by writing off the stolen inventory item as scrap or similar in the
inventory records so that they coincide with actual physical inventory levels.
 Noncash theft – where internal thieves often steal inventory and supplies from company
warehouses or storage areas.
5. Fraud involving investments
 Pump and dump – occur when someone acquires control of a large amount of a
company’s stock and then pump up the price.
 Advance fee scheme – persuaded to pay money up front to take advantage of an offer
promising significantly more in return, often target are investors who lost money to help
recover the losses.
 Bogus offerings – this sold in the form of an unverifiable breakthrough technology or
forthcoming large contract announcement for some unknown company.
6. Fraud involving PPE
 Wrong write-off of the asset as scrap, obsolescence, missing, donated or destroyed.
 Using an entity’s assets for personal use. For example, using the entity’s assets as
collateral for a personal loan or a loan to a related party
 The asset is intentionally sold below fair market value.
7. Fraud involving liabilities
  Overstating purchase returns or purchase discounts
 Making it appear as if liabilities have been paid when they have not.
 Not recording purchases or recording the purchases after the end of the year.

8. Fraud involving stockholder’s equity

 Charging expenses directly to retained earnings rather than to the appropriate expense
accounts.
 Stock options are backdated.
 Dividends are paid to wrong parties or at incorrect amounts.