Skimming the Most Common Way to Commit Fraud

Embezzling money from the employer is a temptation too strong for some to resist.

The Association of Certified Fraud Examiners (ACFE), a professional association of 30,000 anti-fraud specialists, puts a high cost on occupational fraud and abuse. According to its most recent Report to the Nation on Occupational Fraud and Abuse, losses topped $761 million in the U.S., with the typical organization losing 6 percent of its annual revenues to fraud.


Advertisement


Thousands of executives with financial reporting responsibilities use the Comperio on-line library to access the type of information and interpretive guidance PricewaterhouseCoopers' own professional audit staff use around the world. Key content areas include guidance from the FASB, EITF, PCAOB, SEC, and others as well as PwC's interpretive guidance. Get more information and sign up for a complimentary 30-day trial.


The most common schemes are asset misappropriations, such as skimming revenue, stealing inventory or payroll fraud. “Not surprisingly,” the 2004 report said, “the asset that was most frequently targeted was cash. Of 471 asset misappropriation cases we reviewed, 93 percent involved the misappropriation of cash.”

Take the case of a bookkeeper for an elementary school in Bastrop, La. who confessed to stealing $17,000 since the school year began. Instead of depositing the money into the Morehouse Parish School System account, she kept the cash for herself. After an internal audit turned up the discrepancy, she was arrested on suspicion of felony theft on March 3, the Bastrop Daily Enterprise reported.

And in Arizona, a part-time bookkeeper who earned only $400 a month for the Los Olivos Water Delivery and Irrigation District, was charged earlier this month with embezzling about $89,000 between 2002 and 2005. She was charged with four counts of theft for money embezzled between 2002 and 2005.

The Arizona Republic reported that Michelle Blanchard, 39, would ask the water district's board members to sign blank checks, supposedly so she could pay the district's bills, but would cash the checks instead.

What did she do with the taxpayer money? According to the Maricopa County Attorney's Office, Blanchard bought a 2006 Chevrolet pickup truck.

In one case in Sterling, Colo., a secretary for a construction company used her access to employees' personal information, including their Social Security numbers, to steal the identity of at least one employee. She allegedly purchased about $6,000 worth of merchandise, including computers, cell phones and items from Dillard's department store. She was caught after the victim started hearing from Dell about unpaid bills for computers he never purchased, the Journal-Advocate reported.

The ACFE says that fraud is uncovered more often by employee tips than through audits or other methods, and that confidential hotlines reduce fraud significantly.

You may like these other stories...

Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
Some of your clients may get away to business conventions from time to time. It gives them a chance to rub shoulders with colleagues, catch up on the latest developments, and fine-tune their skills. And, when the meetings or...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.