Deck 8: Register Disbursement Schemes

Question 1

Which of the following can be used to conceal a false refund scheme?

A) Destroying register tapes
B) Issuing refunds below the review limit
C) Forcing inventory totals
D) All of the above

Answer 1

D

Question 2

For the perpetrator, the most dangerous part of a typical register disbursement scheme is often:

A) Physically removing the cash from the register and carrying it out of the store
B) Adjusting the cash register tape to match the cash count
C) Replacing the returned merchandise in the physical inventory
D) Forging the customer receipt as documentation for the reversing transaction

Answer 2

A

Question 3

Leslie White, CFE, was called in to investigate suspicious activity at Anderson's Department Store. During her investigation, she ran a test to search for customer sales and refunds that occurred on the same day. She also summarized refunds by employee and extracted the names of all employees who can post both refunds and inventory adjustments. What type of scheme is Leslie most likely looking for?

A) Skimming
B) Unconcealed larceny
C) Fraudulent reimbursements
D) Fictitious refunds

Answer 3

D

Question 4

Register disbursement schemes are different from skimming and larceny at the register in that they:

A) Are on-book schemes, where as skimming and larceny are off-book schemes
B) Require the use of an accomplice
C) Leave a record of the removal of money on the register tape
D) All of the above

Question 5

According to the textbook, the best way for an organization to prevent fraudulent register disbursements is to:

A) Have each employee compare the cash in his or her register drawer to the register tape at the end of each shift.
B) Maintain appropriate separation of duties.
C) Have a policy requiring photocopied receipts for sales refunds.
D) All of the above

Question 6

To safeguard against false voids schemes, companies should require a copy of the customer's receipt from the initial purchase as documentation for voided sales.

Question 7

Which of the following procedures can be used to prevent and detect a register disbursement scheme?

A) Randomly call customers who have returned merchandise or voided sales.
B) Restrict access to the control key or management code that authorizes reversing transactions.
C) Place signs around the store encouraging customers to ask for and examine their receipts.
D) All of the above

Question 8

Running a computer program that compares adjustments to inventory to the void/refund transactions summarized by employee can detect which of the following schemes?

A) Register disbursement schemes
B) Cash larceny schemes
C) Skimming schemes
D) All of the above

Question 9

Meredith Chapman works as a retail clerk at a children's clothing store. When a customer returns an item for a cash refund, Meredith enters an amount greater than the actual refund into the register, pays the customer the amount owed for the returned merchandise, and keeps the excess cash for herself. What type of scheme is Meredith committing?

A) Overstated expenses
B) Cash larceny
C) Overstated refunds
D) Skimming

Question 10

Which of the following is a type of register disbursement scheme?

A) Fictitious refunds
B) Overstated refunds
C) False voids
D) All of the above

Question 11

An excessive number of reversing sales transactions at the register is an indicator of which of the following schemes?

A) Skimming
B) Register disbursement
C) Pass-through scheme
D) Multiple reimbursements

Question 12

Sara Michaels works as a sales associate in the shoe department at a large chain department store. To supplement her income, Sara processed multiple fictitious refunds on sales made to customers. This is an example of what type of asset misappropriation?

A) Register disbursement fraud
B) Pay and return scheme
C) Skimming scheme
D) Cash larceny scheme

Question 13

When an employee perpetrates a credit card refund scheme, the perpetual inventory will show a greater amount than the physical inventory.

Question 14

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, register disbursement schemes were the most frequently reported type of fraudulent disbursement scheme.

Question 15

Nicolas Barrens conspired with his manager to steal nearly $6,000 over 2 months from the grocery store where they worked. Each time Nicolas rang up a customer at the register, he asked the customer if he'd like a receipt. When a customer said no, Nicolas pretended to discard the receipt in the trash, but actually slipped the receipt into his pocket. At the end of his shift, he filled out a void slip for each of these sales and submitted them to his supervisor for approval. With the original receipt and the approved void slip, Nicolas removed cash from the register in the amount of the voided sales and split the proceeds with his supervisor. Nicolas committed what type of fraud scheme?

A) Fictitious expenses
B) False voids
C) Skimming
D) None of the above

Question 16

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, median losses due to register disbursement schemes were the highest of all the fraudulent disbursement schemes.

Question 17

Which of the following tests can be used to detect register disbursement schemes?

A) Extract the top 10 employees with the lowest sales activity.
B) Identify and examine unique journal entries in the cash accounts.
C) Identify customer sales posted to one credit card and refunds posted to another credit card.
D) None of the above

Question 18

Greg Manor is the sales manager at County Arts & Crafts Supply. Recently he has received several complaints from customers who claim they were not given a receipt for their purchases. What type of scheme might this situation indicate?

A) Skimming
B) False refunds
C) False voids
D) All of the above

Question 19

Register disbursement schemes are difficult to conceal because they cause the cash drawer to be out of balance with the cash register tape.

Question 20

Billy Mitchell is the head cashier for a clothing store that specializes in men's silk suits. After losing big at the local dog track, Billy was in the hole financially. To cover his gambling debts, he started issuing numerous refund credits to his own credit card for amounts just below the store's review limit. This is an example of a __________________ scheme.

A) Cash larceny
B) Credit card skimming
C) Fictitious refunds
D) Understated reimbursement

Question 21

In one of the case studies in the textbook, Bob Walker was the head cashier for a discount drug store who perpetrated his fraud scheme by issuing fictitious refunds. What happened to Walker?

A) He was placed on probation and ordered to make full restitution.
B) The store terminated his employment and accepted a promissory note for the amount stolen in return for not turning him over to the police.
C) His parole for a previous conviction was revoked and he was returned to prison.
D) He was arrested, but disappeared after making bail.

Question 22

In one of the cases in the textbook, Joe Anderson, a part-time shoe salesperson at a department store, perpetrated a fictitious returns scheme using third-party credit cards. Why was a fraud examination initiated?

A) Another employee witnessed Anderson pocketing cash and reported the incident.
B) The shoe department was losing money and had a high rate of returns on its shoes.
C) The store's surveillance camera caught Anderson pocketing the money.
D) Anderson credited the wrong account and the customer called up to inquire as to why her credit card had been credited.

Question 23

In one of the case studies in the textbook, Bob Walker was the head cashier for a discount drug store who perpetrated his fraud scheme by issuing fictitious refunds. What was Walker's motive for committing the crime?

A) His wife became ill and needed money to pay for prescription drugs.
B) He had been demoted from a management position and wanted to get back at the store.
C) He lost a lot of money gambling and was too embarrassed to tell his wife.
D) He had accumulated nearly $60,000 in credit card debt and was about to lose his house.

Question 24

In one of the cases in the textbook, Joe Anderson, a part-time shoe salesperson at a department store, perpetrated a fictitious returns scheme using third-party credit cards. What happened as the result of the investigation?

A) Anderson was terminated and promised to pay back all the fraudulent proceeds.
B) The department store recovered most of its losses through its bonding company.
C) Local and federal charges for embezzlement and financial transaction card fraud were brought against Anderson and 27 co-conspirators.
D) All of the above

Question 25

In one of the case studies in the textbook, Bob Walker was the head cashier for a discount drug store who perpetrated his fraud scheme by issuing fictitious refunds. How was the fraud discovered?

A) The bookkeeper noticed an unusually large number of policy overrides by Walker.
B) The internal auditor developed a computer program that identified cashiers with an unusually high number of returns.
C) The store manager caught Walker pocketing cash.
D) An anonymous tip from the company's hotline came into the asset protection department.