Question

1. Which of the following is not a control to prevent check fraud?

MULTIPLE CHOICE

		a. Establish duties so the same person authorizes checks, signs them and reconciles the bank statement.
		b. Reconcile the bank account when you get the statement.
		c. Keep the check stock locked up.
		d. Perform background checks in the hiring process.

3. In a check tampering scheme the fraudster does not have to have physical access to the check.

MULTIPLE CHOICE

True or false

5. What is the purpose of a shell company?

MULTIPLE CHOICE

		a. It is a fictitious entity established for the purpose of committing fraud.
		b. It is an entity established to pay minimal taxes.
		c. It is an entity established to shield management from litigation.
		d. It is an entity established so consumers will not know from whom they are purchasing goods.

7. In order to accomplish a forged maker scheme an employee must do all of the following except:

MULTIPLE CHOICE

a. Have access to the blank checks.

b. Produce a convincing forgery of an authorized signature. c. be able to conceal his crime d. have access to the cash

9. True or false? In a forged maker scheme the check has already been written.

MULTIPLE CHOICE

True

False

11. Why do most shell company schemes involve the purchase of services rather than goods?

MULTIPLE CHOICE

		a. When the billing scheme involves fictitious goods, the defrauded company may be able to detect the fraud by comparing purchases to inventory levels.
		b. Services are more costly than goods.
		c. Normally services go through a less stringent approval process as goods.
		d. Most companies purchase more services than goods.

12. True or False?  Banks are always required to reimburse customers for forged checks.

13. In a concealed check scheme an employee prepares a fraudulent check and submits it usually along with legitimate checks to an authorized maker who signs it without a proper review.  

True

False

Answer 1

Answer 1 : (a)

Assigning responsibility to the same person for authorizing checks, signing them and reconciling the bank statement is not a control to prevent check fraud.

This is because there would be no cross checks by any other person until or unless an audit is conducted by which time it might be too late to recover the amount lost.

Reconciling the bank account on getting the bank statement, keeping the cheque book locked up or performing backgroung checking in hiring process to know the credibility of employees are all infact controls to prevent cheque fraud.

Answer 3: False

In order to be able to tamper a cheque, the fraudster need to have physical access to cheque book. Cheque Tampering involves writing one's own or one's relative name as payee on the company's cheque instead of actual vendor or stealing of cheques and depositing to one's own account (where cheques are not account-payee).

All these tampering activities require physical access to cheque.

Answer 5 : (b) Entity established to pay minimal taxes

Shell company is not necessarily illegal or fictitious.

Answer 7: (d)

For forged maker scheme, access to cash is not required.

Forged maker scheme involves forgery of signature wherein company forged signature are affixed on company's cheques. To do this, the employee requires access to blank cheques on which sign can be done, be able to accurately forge signature of authorized signatory and then to conceal his crime so that he may not get caught.

Answer 9: False

In a forged maker scheme, signature of authorized signatory if forged on blank cheque (which may then be drawn on employee's own name or his/her relative).

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