CASH

FRAUD Cardo
SCHEMES
THE FRAUDSTER
Cardo is an invoice processor of Walang Katapusan Company. He is

currently in need of funds for his son's college education and his

wife's medication. During the month of March, three employees

Creating
resigned and the company had an employee shortage. Because of

this, invoice processors are given access to supplier creation

FAKE VENDOR system. After weeks of observation, Cardo noticed that Flora, the

controller, only examines transactions with large invoices. As a

ACCOUNTS result, Cardo was motivated to create an invoice and make

payments to Ang Probinsyano Co., which is an inexistent supplier.

Despite the fraudulent scheme made by Cardo, he remained

employed in the company and his actions are not discovered. He had

enough fund for his son and his wife already recovered. However, he

F R A U D U L E N T wanted to buy a car for himself and because he is moved to payroll

processing unit, he planned another fraudulent activity. He noticed

Disbursement that the payroll account is not regularly reconciled, thus he decided

to create several payroll acounts for ghost employees and set aside

the wages for his own. The activity of Cardo remained unnoticed so

he became overconfident and even over-reported his hours of work

with the intent to receive more pay.

After a few years of stay to the company, Cardo decided to apply in

another firm for better experience. With the intent to execute another

fraudulent act, he applied for the position of collecting officer in Huling

Cash Dekada Company. He decided that this will be the last time that he will

steal cash in the company where he is employed because he decided to

SCHEMING
retire and make his own business. He desired to have his own resort and

planned to name it Bagong Buhay Resort as a commemoration to his

change of lifestyle. However, this requires large capital, so as a collecting

officer, Cardo decided to keep some of the cash from a customer sale

and report only an inventory loss to conceal his act.

And to finally achieve his dream business, Cardo decided to raid the

petty cash box whenever no one was supervising. He had a great

chance to steal because there is no surveillance camera and he is

STEALING CASH known to be a trustworthy employee. The physical internal control of

the company is poor and this gave opportunity to people like Cardo to
from register
continuously execute their cash fraud schemes.

But one Monday morning, Alyana, the supervisor, caught Cardo stealing

from the register. He was investigated and his previous fraudulent acts

were also revealed and he was put in prison.

SUGGESTED Anti-
INTERNAL
CONTROLS
Cardo
THE FRAUDSTER
SEGREGATION OF DUTIES
Authorization, Collection and Recording of transactions

should be segregated .

Creating AUTHORIZATION
FAKE VENDOR Significant transactions like purchasing supplies should

ACCOUNTS
be authorized and approved by the supervisors. In that

way, employees cannot make payments to inexistent

suppliers

ACCOUNTING RECORDS
Maintain adequate audit trail to be used in verification

F R A U D U L E N T and tracking of transactions.

Disbursement
INDEPENDENT VERIFICATION
Data prepared by an employee would be reviewed or

reconciled by an independent personnel in a surprise

basis to prevent theft and other fraudulent act

SUPERVISION
Require supervisory approval for writeoffs and customer
Cash credit

PHYSICAL INVENTORY COUNT

SCHEMING To make sure that proceeds from sale

matches the number count of sold and employees does

of inventory

not pocket cash from sale, physical count is needed

ACCESS CONTROL
Along with segregation of duties, maintaining physical

STEALING CASH security is also needed because cash is inherently prone

to theft

PHYSICAL CONTROL
from register

Implementing physical security to safeguard assets such

as hiring guards and setting up surveillance cameras.