1-3 Journal Assignment: Case Study Choice Instructions In this journal assignment, you will choose the case study for your final project. There are four types of fraud schemes in Word Document to choo
Inventory Fraud
Inventory fraud occurs two ways.
Theft of Inventory occurs when employees actually take physical inventory from their employer. Any inventory taken for personal use or for resale is inventory fraud regardless of the size or amount of the theft.
Financial Statement Fraud occurs when purchase or sale of inventory is reported in the wrong accounting period. Senior management is typically the perpetrator of this type of fraud scheme. It impacts the balance sheet (inventory) and the income statement (cost of goods sold) and affects multiple accounting periods.
Accounts Payable Fraud
Accounts payable fraud is often referred to as vendor fraud. This is the most common type of white- collar crime. It occurs when companies pay vendors or fictitious vendors for goods or services either not received or at inflated prices. The most common schemes for accounts payable fraud are shell companies, personal purchases, fraudulent expense reimbursement, and check tampering.
Payroll Fraud
Payroll fraud occurs when companies pay employees or fictitious employees for services that were not performed. This typically occurs by employees creating ghost employees, reporting hours or overtime that were not actually worked, or inflating sales, resulting in overpayment of commissions or bonuses. This is a fraudulent payment scheme.
Cash Receipts Fraud
Cash receipts fraud occurs when employees steal cash from their employer. In this fraud scheme, there is a lack of audit trail. However, the sale must be concealed in some way. This fraud scheme is typically achieved through unrecorded sales by taking cash at the time of the sale, understating sales and receivables, or stealing cash from payments received via mail.
