Cash Larceny, Part One

No fixed responsibility losses

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

We've just completed a series of articles on skimming - an off-book theft of the organization's revenue. With this column, we begin a new series about cash larceny - on-book frauds in which employees steal the organization's revenue after accountability for the funds has been recorded in the accounting records. While employees involved in skimming are often difficult to detect, quite the opposite is true for employees who commit cash larceny schemes. The strange thing that I've found in my practice is that these employees often make little or no effort to conceal the irregularities that eventually lead to their demise. I like it when they do this because it makes my job a lot easier! 

No fixed responsibility
Before we delve into specific cash larceny schemes, I first want to discuss a related issue involving the manner in which funds are all too often mishandled within the organization. In a recent two-year period, approximately 36 percent of the number of cash receipting cases in my state (Washington) involved no fixed responsibility for the loss. That statistic is way too high. It demonstrates that many managers incorrectly deal with this risk within their organizations today. The good news is that the amount of losses from these cases was only about $83,000 about 2.5 percent of the total amount of losses reported in my state during this period.

Normal business and operating cash shortages by cashiers and the theft of funds during breaking and entering events by outsiders have been excluded from this presentation. Organizations should keep informal records of cashier losses and periodically review it for undesirable trends. Sometimes certain employees just aren't suited for the cashier role. Police reports should also be promptly filed with the appropriate law enforcement agency when break-ins occur.

For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.