Deck 12: Cash Disbursement Schemes

Question 1

Obtaining blank checks is unnecessary if the fraudster can produce counterfeit
checks.

Answer 1

True

Question 2

Using an accomplice as the payee is one way to hamper detection of fraudulent payee schemes.

Answer 2

True

Question 3

An employee intercepts a blank check and forges the treasurer's signature to conceal that the check is payable to the employee. This is an example of a forged maker.

Answer 3

True

Question 4

An employs purchases office supplies with his personal credit card and submits an inflated receipt for payment. This is an example of "pay and return".

Question 5

An employee intercepts a legitimate check made payable to a vendor and changes the payee name to his name. This is an example of a forged maker.

Question 6

Fraudulent endorsement schemes commonly involve the interception of a signed check before mailing.

Question 7

Shell companies require collusion amongst employees in order to be successful.

Question 8

Fraudulent disbursements are commonly made to a fictitious payee.

Question 9

"Rubberstamping," in shell company situations means that a rubber stamp
is used for signatory purposes.

Question 10

Overpayment of a vendor invoice is one example of a "pay and return" scheme.

Question 11

If a check is made payable to cash, detection of the fraudster is made more difficult.

Question 12

In order to be successful, a fraudulent scheme must intercept checks before they are signed.

Question 13

Using an accomplice as the payee is one way to hamper detection of fraudulent maker schemes.

Question 14

A pass-through scheme requires the use of a legitimate vendor.

Question 15

A check issued to an employee for duplicate expense receipts is not a fraudulent disbursement since it involves legitimate documentation.

Question 16

Fraudulent endorsement requires use of a facsimile signature stamp.

Question 17

In order for a "pay and return" scheme to work, vendors must be an accomplice.

Question 18

Ghost employees are employees that physically exist but are not on the payroll records.

Question 19

Ghost employees are usually paid in cash.

Question 20

"Kickback" schemes involve the vendor as an accomplice.

Question 21

After an invoice is vouched, a check is generated by the computer: The next step should be:

A) Having accounts payable mail the check to the vendor
B) Having Purchasing mail the check to the vendor
C) Having the cashier mail the check to the vendor
D) Any of the above

Question 22

Mischaracterized expense schemes involve payment for legitimate expenditures.

Question 23

One way of diverting revenue for personal gain is to charge an amount higher than the price list and keep the difference.

Question 24

Forged expense schemes involve the changing of amounts on legitimate expense documents.

Question 25

Fictitious revenue schemes are frequently designed around commission plans.

Question 26

Which of the following is an example of a fictitious maker:

A) A check made payable to person A that is cashed by person B
B) A check based on fraudulent supporting documentation
C) A check whose signature is forged
D) None of the above

Question 27

A pass through scheme requires:

A) The availability of an accomplice at a legitimate vendor
B) The ability to add vendors to the vendor master file
C) The ability to change purchase order prices after approval
D) All of the above

Question 28

Which of the following renders the separation of duties control useless:

A) Fraudulent maker
B) Fraudulent payee
C) Rubber stamping
D) None of the above

Question 29

Including a supervisor's expenses on his employee's expense report is one way of committing expense fraud.

Question 30

Falsifying time and attendance data are central to a ghost employee scheme.

Question 31

One way to thwart a ghost employee scheme is for someone with no responsibility for collection of time and attendance data to distribute the paychecks.

Question 32

Brenda is the new company CFO and she wants to prevent a shell company scheme. She should implement which of the following controls:

A) Separation of duties between accounts payable and the treasurer
B) Separation of duties between purchasing and the controller
C) Separation of duties between purchasing and accounting
D) None of the above

Question 33

In order for a ghost employee scheme to work, the paycheck for the ghost must go to the person involved in the scheme.

Question 34

Who should be charged with adding a new vendor to the master file:

A) Purchasing
B) Accounts payable
C) The cashier
D) None of the above

Question 35

One way of diverting revenue for personal gain is to make fictitious sales to accomplices using bogus credit cards and "splitting the difference".

Question 36

Which of the following is a fictitious payee:

A) An employee intercepts a legitimate check made payable to a vendor and changes the payee name to his name.
B) An employee writes a check payable to cash and endorses it for his personal use
C) An employee changes the amount of the check to make it larger
D) Both "a" and "b"

Question 37

Detecting a shell company scheme requires:

A) A review of bank statements
B) A review of cash disbursements
C) An analysis of price variances
D) Both "b" and "c"

Question 38

A shell company is:

A) A fictitious company
B) Is controlled by a fraudster
C) Is used to conceal fraudulent invoices
D) All of the above

Question 39

Overpayment and subsequent reimbursement will not work if:

A) Original supporting documents are cancelled
B) There is separation of duties between the payment requestor and accounts payable
C) Vouching of the payment requires the controller's approval
D) All of the above

Question 40

Pay and return schemes depend on which of the following controls being absent:

A) Separation of duties between the payment requestor and the mailroom
B) Separation of duties between the mailroom and cash receipts
C) Separation of duties between the vendor and the payment requestor
D) None of the above

Question 41

One common way to divert sales proceeds to yourself is by:

A) Opening a store for business before official starting time
B) Giving discounts for damaged merchandise without management approval
C) Diverting inventory to another store
D) All of the above

Question 42

Register disbursement fraud in the form of falsified returns can be detected by:

A) Inventory counts
B) Cash counts
C) Examination of return receipts
D) All of the above

Question 43

Detecting fraudulent makers requires review of:

A) The bank statement
B) The cancelled checks
C) The accounting records
D) All of the above

Question 44

An employee has a business dinner with her supervisor. The supervisor requires that the employee complete an expense report and list the supervisor's meal as entertainment. The reason for this is:

A) The supervisor wants to avoid having the expense report reimbursement delayed
B) The supervisor wants to avoid having his supervisor see the amount spent
C) The supervisor wants the employee to obtain credit for entertaining
D) None of the above

Question 45

Mischaracterized expense schemes include:

A) Paying for entertainment of corporate clients
B) Paying for expenses incurred on behalf of your employees
C) Paying for expenses from an account you control
D) All of the above

Question 46

Falsifying hours worked is detected by:

A) Transferring time and attendance data responsibility to personnel
B) Transferring funds for payroll from the general account to the payroll account
C) Requiring employees sign for the hours worked
D) All of the above

Question 47

Which of the following would prevent a ghost employee scheme:

A) Separation of payroll and personnel functions
B) Separation of timekeeping and payroll functions
C) Separation of timekeeping and supervisor functions
D) None of the above

Question 48

Forged endorsement of checks requires:

A) Access to the check prior to signing
B) Access to the check prior to delivery
C) Access to the check prior to making
D) None of the above

Question 49

A commission scheme can be detected by:

A) Examining sales return patterns
B) Examining sales over a certain amount
C) Examining sales returns
D) All of the above

Question 50

One way to detect altered expense schemes is to:

A) Compare the expenses claimed to the credit card statement
B) Require a company issued credit card for all expense purchases
C) Require a full printed receipt, as opposed to a "summary receipt"
D) All of the above

Question 51

Which of the following controls should assist in preventing fraudulent makers:

A) Strict control of the check signing machine
B) Prohibition on the use of facsimile signatures
C) Control of the blank check stock
D) Both "a" and "c"

Question 52

Rerouting a check from its intended delivery location is an example of:

A) Fraudulent maker
B) Fraudulent endorser
C) Fraudulent payee
D) None of the above

Question 53

Alteration of expenses includes:

A) Altering the amount of an expense item
B) Changing the purpose of the expense from personal to business
C) Altering the names of clients entertained
D) All of the above

Question 54

How do you detect a ghost employee:

A) Have someone other than the supervisor distribute paychecks
B) Have paychecks automatically deposited
C) Trace timecards to actual employees
D) Both "a" and "c"

Question 55

Which of the following is a red flag that fraudulent expense reporting is occurring:

A) Receipt numbers for the same establishment that are consecutive even though they occur over a period of time
B) Expense amounts ending in "0"
C) Expense amounts consistently under the threshold for requiring a receipt
D) All of the above

Question 56

One way of perpetrating register disbursement fraud is to:

A) Have an accomplice return fictitious goods for reimbursement
B) Undercharge for goods and split the difference with the accomplice
C) Failure to ring up a cash sale and pocketing the cash
D) All of the above

Question 57

Ghost employees can be created by:

A) Directing employees to falsify time and attendance data
B) Failing to remove a terminated employee from the payroll
C) Padding actual employees' hours worked
D) All of the above

Question 58

One way fast food restaurants discourage the pocketing of cash by cashiers is:

A) Having two separate windows: one for ordering and one for payment
B) Requiring employees issue a receipt
C) Offering a cash reward to customers who do not receive a receipt
D) Both "a" and "c"

Question 59

The separation of which tasks is needed to prevent ghost employees:

A) Timekeeping and the supervisor
B) Paycheck distribution and the supervisor
C) Timekeeping and payroll
D) Both "a" and "b"