Quiz 14: Fraud Against Organizations

Business

There are two basic types of fraudulent schemes that take place at the register such as false refunds and false voids. False refunds: In case of false refunds, the perpetrator processes a transaction as if a customer returns merchandise, even though there is no actual return. Then the perpetrator receives cash from the register for the false return made. A similar false refund fraud is overstating of refunds which means that value of the return is overstated in case of return of merchandise from the customer. False voids: False voids are similar to the false refunds. When the sale is voided on the register, the copy of receipt of customer is attached to the void slip along with the signature of a manager that indicates that the transaction has been approved. In order to conduct fraud, the perpetrator takes the receipt of the customer during sale and then as soon as the customer left the shop, he rings in an annulled sale. Then the perpetrator takes the money from the register which was paid by the customer for the product. To maintain the legitimacy, the executioner attached the receipt of the customer to the voided slip. 1) Type of fraud committed is as follows: Fraud conducted by Regina comes under false refunds, one of the types of register disbursement schemes. Register disbursement scheme is least cost scheme among all disbursement schemes. In case of false refunds, a customer returns the merchandise to the perpetrator. Instead of showing the amount of returned merchandise at correct amount, perpetrator would overstate value of an item. In this process of fraud, the perpetrator would pocket extra amount and give the amount due to the customer. Hence, Regina conducted one of types of false fraud. (2) Analysis on detection of fraud by the employer as follows: It is very difficult for the perpetrator to hide this fraud. Though it may seem that since the inventory and cash register are all balanced at the end of the process, but a deeper investigation would reveal that the inventory goods was returned and that cash is short from the register. Detection of fraud can be identified by verifying the inventory records and inventory count. In case of return of merchandise, a debit is made to inventory showing that merchandise inventory has been returned. But the amount of returned merchandise is shown at overstated amount instead of showing at correct value. This fraud can be verified by calculating correct value of merchandise returned. After recording the entry, amount due is returned to the customer and overstated amount is taken into his pocket.

There are two basic types of fraudulent schemes that take place at the register such as false refunds and false voids. False refunds: In case of false refunds, the perpetrator processes a transaction as if a customer returns merchandise, even though there is no actual return. Then the perpetrator receives cash from the register for the false return made. A similar false refund fraud is overstating of refunds which means that value of the return is overstated in case of return of merchandise from the customer. False voids: False voids are similar to the false refunds. When the sale is voided on the register, the copy of receipt of customer is attached to the void slip along with the signature of a manager that indicates that the transaction has been approved. In order to conduct fraud, the perpetrator takes the receipt of the customer during sale and then as soon as the customer left the shop, he rings in an annulled sale. Then the perpetrator takes the money from the register which was paid by the customer for the product. To maintain the legitimacy, the executioner attached the receipt of the customer to the voided slip. 1) Type of fraud committed is as follows: Fraud conducted by Regina comes under false refunds, one of the types of register disbursement schemes. Register disbursement scheme is least cost scheme among all disbursement schemes. In case of false refunds, a customer returns the merchandise to the perpetrator. Instead of showing the amount of returned merchandise at correct amount, perpetrator would overstate value of an item. In this process of fraud, the perpetrator would pocket extra amount and give the amount due to the customer. Hence, Regina conducted one of types of false fraud. (2) Analysis on detection of fraud by the employer as follows: It is very difficult for the perpetrator to hide this fraud. Though it may seem that since the inventory and cash register are all balanced at the end of the process, but a deeper investigation would reveal that the inventory goods was returned and that cash is short from the register. Detection of fraud can be identified by verifying the inventory records and inventory count. In case of return of merchandise, a debit is made to inventory showing that merchandise inventory has been returned. But the amount of returned merchandise is shown at overstated amount instead of showing at correct value. This fraud can be verified by calculating correct value of merchandise returned. After recording the entry, amount due is returned to the customer and overstated amount is taken into his pocket.

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