Question

in what ways could computerized accounting software or spreadsheets continue an ongoing fraud scheme relating to receivables? Using the KU library, research fraud schemes that involve receivables and share your findings.

Answer 1

Even after the business has started using computerized accounting software but the occurrence of fraud has not yet been controlled. There are many schemes used by employees and other people within an organization to involve in the fraud. Such schemes are discussed below: -

1.Lapping Scheme: -

In this scheme, cashier misappropriates money received from one customer and apply such money to another customer account.

For example, money received from A is $100. It is not recorded in the books. And then, receipt of $100 from B is recorded in the account of A. Hence account of A is settled. A is the customer who normally pays off his dues on time. However, B does not pay is dues on time and therefore outstanding amount from B gets unnoticed. And whenever, the company want to ask the money from B, cashier allocates the money received from C to B account and hence keeps playing with the customer's accounts.

2. Skimming Receivables: -

In this scheme when the amount is received from the customer then cashier takes the money and does not record in the books. This he generally does for the small customers which do not follow with the company about their balances. Ans since at the closing of financial statements, company is at the pressure to clear its receivables it generally writes off their accounts to avoid unnecessary clutter in financial statements. Thus, the cashier gets money and transaction goes unnoticed.

3. Sales Skimming: -

In this skimming when sales are done, receipts are not recorded in the books of accounts. And the amounts received is taken by the employee for his personal use. This is generally done with one-time customers by issuing fake receipts.

Thus company should follow strong internal control procedures in order to capture these frauds and help the company to state its receivable correctly in the books.

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