Cash larceny, part six

Alteration of accounting documents in imprest fund accounts


By Joseph R. Dervaes, CFE, CIA, ACFE Fellow
Fraud's Finer Points

This column continues our discussion about cash larceny frauds. In the fraud cases that follow, employees falsely prepared or altered cash receipt accounting records and documents in imprest fund accounts to conceal the misappropriation of funds from the organization. Here we'll discuss fraud in advance travel funds.  

Many organizations use an advance travel fund to disburse funds to employees before they depart on official business trips. Once travel has been approved, an employee will request the advance travel fund custodian to disburse funds to him so he can pay for business expenses while traveling. An employee submits a travel expense reimbursement report to the organization when the official business trip has been completed. The organization then disburses funds to the advance travel fund for the amount of funds advanced to the employee, and to the employee for the amount of expenses that he incurred in excess of the amount of funds advanced. Obviously, if the employee spent less than the amount of the travel advance, he returns the excess funds to the advance travel fund custodian after completion of the official business trip. Here are some standard procedures for advance travel funds:

  • Management must approve all travel advance requests and ensure they're supported by pertinent documents associated with the travel such as conference brochures.
  • Employees may not receive more than one travel advance at a time. In addition, the amount of these travel advances is normally set for an even-dollar amount (for example, $900, $1,000, etc.) that's less than the total expected amount of expenses for the trip.
  • Employees must submit travel expense reimbursement reports to the organization within 10 days of completing the travel and the custodian of the advance travel fund shouldn't normally travel on behalf of the organization.
  • Someone independent of the custodian must receive the monthly bank statement directly from the bank and reconcile it promptly.

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