Melanie Diggers is an internal auditor for Atlantic Equipment Rental and Sales. While performing a routine review of one of the company's bank accounts, she noticed an unusual "adjusting entry" to the account on the general ledger. She also found that several checks that had cleared the bank in the last few months were absent from the stack of canceled checks. She requested copies of these checks from the bank and discovered that they were all made payable to the company's controller who has check signing authority on the account. The controller is also responsible for performing the bank reconciliation and recording month-end journal entries. Which of the following schemes do these signs most likely indicate?
A) Concealed check scheme
B) False voids scheme
C) Authorized maker scheme
D) Forged maker scheme

Question

Quizplus · Accepted Answer

The scenario described involves the company's controller, who has check signing authority, making checks payable to themselves and covering up the transactions with adjusting entries. This is indicative of an Authorized Maker Scheme, where the individual who has the authority to issue checks misuses this power to embezzle funds.

Melanie Diggers Is an Internal Auditor for Atlantic Equipment Rental