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Fraudulent Activity In Business

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1) Companies depend on banks to help oversee their accounts and in some cases a breakdown in controls happens at the bank. With internet and remote capture banking becoming more popular, what controls should banks have in place to insure proper controls over remote deposits?

2) What procedures, if any, can we use during the invoicing process to eliminate the possibility of someone duplicating or changing information after it leaves the accounting department?

3) What type of fraudulent activity could this have been and what type of testing could have been included in the audit to discover it?

4) What can auditors do to verify inventory levels and that no fraudulent activity is occurring between annual inventory reconciliations?

5) What detection methods can be used to uncover this type of scheme?

6) What steps can employers take to minimize the misuse of non-cash assets by employees - or is this just a 'cost of doing business'?

7) What controls should a company have in place to prevent and detect larceny of inventory?

8) What ways can employees conceal inventory shrinkage?

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Fraudulent Activity in business is explained in a structured manner in this response. The answer includes references used.

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1. There are several steps that banks can take to prevent remote deposit capture related frauds. The first fraud that the bank should guard against is duplicate deposit fraud. The bank software should detect duplicate deposits, the bank's deposit receiving platform should also detect duplicate deposit, and the deposit systems should also have the capability to identify duplicate items. Forged endorsements can be detected by using image technology that reads the name of the payee and automatically compares it to the name of the account to which it is deposited. An important policy is to disallow customers to deposit third party checks through remote deposit capture. Alterations on the check can be verified by using automated recognition technologies for payee name verification. Counterfeit checks are detected if the bank installs equipment that examines the image of the check, discoloration, watermarks, borders, and heat sensors. The installation of this equipment helps detect frauds relating to counterfeit. To counter payee fraud, the bank should above a particular dollar threshold transmit the image to the drawee for verification.

2. The accounting department must send a copy of the invoice to the cash department. The invoice when presented for payment must be ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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