Deck 3: Cash Larceny Schemes

Question 1

Larceny schemes are generally more difficult to detect than skimming schemes.

Answer 1

True

Question 2

Where do most larceny schemes involving cash occur?

A) In the accounting department
B) In the mailroom
C) At the point of sale
D) At off-site locations

Answer 2

C

Question 3

Which of the following antifraud controls can help prevent and detect cash larceny from the deposit?

A) Having two copies of the bank statement delivered to different persons in an organization
B) Comparing the bank authenticated deposit slip with the general ledger posting of the day's receipts
C) Preparing the deposit slip to show each individual check and money order along with currency receipts
D) All of the above

Answer 3

D

Question 4

What is the primary difference between cash larceny and skimming?

A) Cash larceny is an on-book scheme; skimming is an off-book scheme.
B) Cash larceny is an off-book scheme; skimming is an on-book scheme.
C) Cash larceny is a disbursement scheme; skimming is a cash receipts scheme.
D) Cash larceny involves cash only; skimming can involve either cash or checks.

Question 5

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, cash larceny schemes were the least common form of cash misappropriations.

Question 6

The two categories of cash receipts schemes are:

A) Lapping and skimming
B) Lapping and cash larceny
C) Cash larceny and skimming
D) Skimming and billing schemes

Question 7

Which of the following computer audit tests would be the least useful in detecting a cash larceny scheme?

A) Summarizing the difference between the cash receipt report and the sales register system by employee
B) Summarizing the top sales producers by employee
C) Summarizing discounts, returns, and cash receipt adjustments by employee
D) Reviewing all unique journal entries in the cash accounts

Question 8

The most important factor in preventing cash larceny from the deposit is:

A) Separating the duties of the deposit function
B) Having two employees deliver the deposit to the bank
C) Having a visible management presence in the mailroom
D) None of the above

Question 9

Running a report that summarizes user access for the sales, accounts receivable, cash receipt, and general ledger systems during non-business hours might identify a cash larceny scheme.

Question 10

Deposit lapping is considered an off-book scheme.

Question 11

Jan Ashley worked for the R&S Department Store as a sales associate in the fine linens department. As she would give change back to a customer for cash sales, she would also pull out a $10 bill and slip it in her pocket. She concealed her scheme by issuing one false refund at the end of her shift for the total amount she stole that day. This is an example of what type of scheme?

A) Sales skimming
B) Larceny at the point of sale
C) Lapping
D) Larceny at the deposit

Question 12

If discrepancies are found between the sales records and the cash on hand, which of the following schemes might be occurring?

A) Cash larceny at the point of sale
B) Cash larceny from the deposit
C) Fraudulent disbursements
D) Sales skimming

Question 13

To prevent cash larceny through falsification of cash counts, an independent employee should verify the cash count in each register or cash box at the end of each shift.

Question 14

Skimming involves the theft of money that has already appeared on a victim's books, while cash larceny involves stealing money before it has been recorded.

Question 15

Which of the following methods can be used to conceal a larceny scheme that occurred at the point of sale?

A) Falsifying the cash count
B) Destroying the register tape
C) Stealing from another employee's register
D) All of the above

Question 16

Cash misappropriations are divided into two broad groups: fraudulent disbursements schemes and cash receipts schemes.

Question 17

All of the following are ways a fraudster might conceal cash larceny from the deposit except:

A) Posting missing money as "deposits in transit"
B) Deposit lapping
C) Falsifying the bank copy of the deposit slip
D) Destroying customer statements

Question 18

The central weakness of a cash larceny scheme is the resulting imbalance in the organization's accounting records.

Question 19

Methods for concealing larceny of receivables include which of the following?

A) Lapping
B) Stolen statements
D) All of the above

Question 20

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, cash larceny schemes had the largest median loss of all cash misappropriations.

Question 21

Jeff Lewis is an accounts receivable clerk for FTB Industries. As customers pay off their balances, Lewis posts the payments but pockets the money. He can conceal his theft by:

A) Making unsupported entries for the amount stolen
B) Adjusting the account with a discount
C) Destroying the records
D) All of the above

Question 22

In one of the case studies in the textbook, Bill Gurado was a branch manager for a consumer-loan finance company in New Orleans who decided to help himself to the daily deposits. Instead of depositing the money into the company's bank account, he deposited the money to his own personal account. How was the case settled?

A) The company pursued civil action for the repayment of the stolen funds.
B) Gurado was terminated and he immediately paid back the money.
C) Gurado was convicted of grand theft and scheming to defraud, and he was placed on probation.
D) Gurado was placed on deferred adjudication and required to make restitution.

Question 23

In one of the case studies in the textbook, Laura Grove was the head teller at a bank in Tennessee. As the head teller, she had the authority to open the night depository along with another teller. For security reasons, each teller only had half of the combination to the vault. In the end, Grove opened the vault and stole two deposit bags worth approximately $16,000. How was the case settled?

A) She paid the bank back in lieu of prosecution.
B) She was prosecuted and sentenced to eighteen months in jail.
C) She was dismissed and signed a promissory note to repay the money.
D) She was prosecuted but received probation in lieu of prison time.

Question 24

In one of the case studies in the textbook, Bill Gurado was a branch manager for a consumer-loan finance company in New Orleans who decided to help himself to the daily deposits. Instead of depositing the money into the company's bank account, he deposited the money into his own personal account. How was Gurado's fraud discovered?

A) He suspected he was on the verge of being caught, called the company's president, and confessed that he had taken the money.
B) The auditors found it during a surprise audit of the branch Gurado managed.
C) His assistant suspected him and reported him to the company's audit committee.
D) A customer called to complain about receiving an overdue notice.

Question 25

Danielle Boyle, CFE, was hired to investigate some suspicious activity in the accounts receivable department at Red Technologies. While examining the company's accounting records, she noticed several payments posted to customers' accounts that were later reversed with journal entries to "courtesy discounts." What type of scheme might this situation indicate?

A) Receivables skimming
B) Deposit lapping
C) Cash larceny of receivables
D) Shell company

Question 26

Dorothy McNally stole $232 from the company deposit while on the way to the bank. She can conceal the theft by recording the missing amount on the bank reconciliation as a(n):

A) Deposit in transit
B) Outstanding check
C) Credit memo
D) None of the above

Question 27

In one of the case studies in the textbook, Laura Grove was the head teller at a bank in Tennessee. As the head teller, she had the authority to open the night depository along with another teller. For security reasons, each teller only had half of the combination to the vault. In the end, Grove opened the vault and stole two deposit bags worth approximately $16,000. How was she ultimately caught?

A) She broke down and confessed to the investigators during a routine interview of all tellers.
B) Her husband found the bank's money and turned her in.
C) The bank found some of the checks in the dumpster near her house with her fingerprints on them.
D) None of the above

Question 28

Victor Jackson, CFE, was hired by BRS Carpet and Tile to investigate possible cash larceny at the point of sale. Which of the following red flags should he look for?

A) Large differences between sales records and cash on hand
B) Unusual journal entries to the cash accounts
C) A large number of small differences between sales records and cash on hand
D) All of the above

Question 29

Mel Turner, the runner for a small bookstore, had a bad habit of helping himself to cash from the deposit on the way to the bank. He covered his tracks by substituting a check from the next day's deposit for the amount he stole from the previous day's deposit. This is an example of what type of concealment?

A) Deposits in transit
B) Deposit lapping
C) Force balancing
D) None of the above