Cash Larceny, Part Two

Manual Cash Receipting Systems


By Joseph R. Dervaes, CFE, CIA, ACFE Fellow

Fraud's Finer Points 

We begin a discussion about the types of cash receipting systems and the related fraud schemes that I've observed in state agencies and local governments in the state of Washington.

Manual cash receipting systems
Many entities use manual cash receipt forms to record revenue. These forms should always be completed in ink, never in pencil. Once these forms are issued to customers, the accounting information is summarized in a cash receipts journal either at the time of issue or later by summarizing the financial activity for each business day, which is then reported on the entities' financial statements.

In previous columns, we discussed skimming frauds in which employees collect money from customers and simply steal it without recording any accountability for the transaction. Often, there's no practical way to determine the amount of loss in such fraud schemes other than by videotaping operations after the organization or customer feedback has identified irregularities in cash receipting practices. This column deals with cash receipt transactions that have been recorded by employees. Thus, when fraud occurs, there's usually an audit trail that helps fraud examiners determine the amount of the loss in the case. Here we'll deal with frauds involving manipulations of cash receipt books and forms. The two primary types of manual cash receipts forms are generic and official.


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