Skimming revenue, part one

The highest-risk employee

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

Fraud's Finer Points 

After a lengthy discussion of accounts receivable fraud, it's time to focus our attention on other prime areas where fraudsters abuse the systems of internal control to raid organizations' treasuries for their own personal benefit. With this column, we begin a journey through the many facets of cash receipting and types of fraud that occur in every organization. Our first step involves skimming: removing funds prior to recording accountable transactions in the accounting system.

Blind trust
Employees are tempted and even put at risk in work environments where internal controls are weak or aren't properly monitored to ensure that management's expectations are being met. Managers tell employees what to do and expect them to do it, but then don't subsequently review their work once the job is done. This lack of monitoring is called "blind trust." This issue is at the heart of many fraud cases and often rears its ugly head in cash receipting frauds. The organization must use the "trust but verify" concept to deal with this common failing. A wise yet unknown Chinese fortune cookie writer recently captured this concept nicely by stating: "Trust others, but still keep your eyes open!"


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