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Chapter 9

Chapter 9. Non-Cash Assets. Inventory and All Other Assets. Misuse. Larceny. Asset Req. & Transfers. False Sales & Shipping. Purchasing & Receiving. Unconcealed Larceny. Non-Cash Misappropriations. Misuse Unconcealed larceny Asset requisitions and transfers

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Chapter 9

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  1. Chapter 9 Non-Cash Assets

  2. Inventory and All Other Assets Misuse Larceny Asset Req. & Transfers False Sales & Shipping Purchasing & Receiving Unconcealed Larceny

  3. Non-Cash Misappropriations • Misuse • Unconcealed larceny • Asset requisitions and transfers • Purchasing and receiving schemes • Fraudulent shipments

  4. Misuse of Non-Cash Assets • Typical misuse • Doing personal work on company time • Running side businesses

  5. The Costs of Inventory Misuse • productivity • additional employees • Lost business • wear and tear

  6. Unconcealed Larceny Schemes • not complex • Some employees know their co-workers are stealing • highly trusted • Assets misappropriated after-hours or mail to themselves

  7. The Fake Sale • accomplice • Sale is not rung up but the accomplice takes the merchandise • return merchandise for cash

  8. Preventing and Detecting Larceny of Non-Cash Assets • Segregate the duties • Maintain physical security • access logs • Install security cameras

  9. Preventing and Detecting Larceny of Non-Cash Assets • inventory counts • Investigate significant discrepancies • customer complaints

  10. Asset Requisitions and Transfers • non-cash assets to be moved from one location to another • Internal documents are used • requisition materials to complete a work-related project but steals the materials • multiple locations

  11. Purchasing and Receiving Schemes • Assets were intentionally purchased by the company but misappropriated • Falsifying incoming shipments

  12. False Shipments of Inventory and Other Assets • False shipping documents and false sales documents • False packing slips • false sale is created • Receivable is aged and written off • Legitimate sale is understated

  13. Other Schemes • Assets are written off • Assets are declared as scrap • New equipment is ordered for the company to replace old

  14. Concealing Inventory Shrinkage What is Inventory Shrinkage? What detects Inventory Shrinkage?

  15. Concealing Inventory Shrinkage • Altered inventory records • Fictitious sales and accounts receivable

  16. Concealing Inventory Shrinkage • Write off inventory and other assets • Physical padding

  17. Preventing and Detecting Non-Cash Thefts Concealed by Fraudulent Support • Segregation of Duties • Match the invoices to receiving reports before payments are issued • Match the packing slip to an approved purchase order

  18. Preventing and Detecting Non-Cash Thefts Concealed by Fraudulent Support • Match outgoing shipments to the sales order before the merchandise goes out • Periodically match inventory shipments to sales records • Investigate shipments that cannot be traced to a sale • Check out unexplained increases in bad debt expense

  19. Preventing and Detecting Non-Cash Thefts Concealed by Fraudulent Support • Compare shipping addresses to employee addresses • Review unexplained entries in perpetual inventory records • Reconcile materials ordered for specific projects with actual work done • Perform trend analysis on scrap inventory • Check to make sure that inventory removed from inventory is properly approved

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