Accounting Case - Three Main Fraudulent Acts

There are so many fraudulent acts that companies faced during the operations of the business. Most of these acts belong to the cash management and book keeping. Accounting is basically the art of recording transaction and during the recording of the transaction any wrong entry can pass which change the position of the company. In the similar manner cash management is also very important for any organization. In this report first of all we see the different types of fraudulent acts in the context of the accounting and cash management and then we analyze that how companies can prevent themselves from these fraudulent acts.

There are the three main fraudulent acts that most of the companies are facing.

* Skimming

* Cash larceny

* Billing schemes

Skimming:

In accounts, skimming is basically any unethical and illegal practice in order to take some amount of money, which is the property of the organization. The theft of the credit card information is also called skimming. There are three main types of skimming:

* Revenue skimming

* Receivables skimming

* Refunds skimming

Revenue skimming is related to the revenue of the company. When cashier take the money of the sales revenue and make the entry in the accounting books that there were no sale. Most of the businessmen do this practice in order to save themselves from tax payments. This type of the skimming is off-book fraud because it does not create any evidence in the books and records of the company.

Receivable skimming is related to the accounts receivable in which the skimmers steal the payment of the receivable. But the account receivable balance of the customer becomes overstated. In this type of skimming the skimmer credit the customer account and debit expense account. This type of skimming is on-book fraud. There are evidence in the books and records of the company of this skimming

Refund skimming is related to the accounts payable and inventory. In this type of skimming, skimmer debit eh expense account and credit the refund due. This type of skimming is also on-book fraud. There are evidence in the books and records of the company of this skimming

There are the different indicators through which one can identify that there is the element of the skimming. Some of them are:

* If the company's revenue is continuously declining.

* If the company's cost of goods sold is increasing.

* If the ratio of the cash sales to credit card sales is also declining.

* If the ratio of the cash sales to total sales is decreasing.

* Difference between the customer's receipts and the company records.

http://www.nysscpa.org/cpajournal/2007/607/essentials/p60.htm

Cash Larceny:

This is type of fraud can easily be detected and company can prevent from this. Cash larceny basically means s that someone intentionally takes or theft the money of the employer. It is very uncommon fraud as compared to the other frauds because it can easily be detected. This is on-book fraud. Normally person steals the cash from the cash register or cash box of the company or it can be from the deposits of the company.

Controls:

Company can easily