Cash Larceny, Part Ten

Fictitious Void Transactions on Type 1 Cash Registers

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

Fraud's Finer Points 

During an external audit, an auditor for a port district found that cash register Z tape numbers were missing from a marina, one of the three major port functions. That irregularity didn't result in fraud but the external auditor found that managers weren't even aware of the missing Z tapes. After additional cash receipt testing, the external auditor did find a fraud involving fictitious void transactions on a marina cash register.

The marina staff recorded all cash receipt transactions on what I call a type 1 manual cash register (those that don't permit voids to be recorded during normal transaction processing) except for the sale of regular and diesel gasoline from a fuel facility located on the dock. The port auditor (who was really a bookkeeper) was the only employee who recorded fuel sales on the cash register and then took control of all revenue collected at the marina. The marina collected a significant amount of currency in the course of business, which was all from fuel sales. These funds were definitely at risk. But no one noticed the danger until it was too late.

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