AUD1205

ILLEGAL
GRATUTIES
FRAUDULE
NT
DISBURSE
Group 4

MENTS
Castillo | Cenal | Cope | Estrella | Indita | Intia | Logan | Muñoz
AUD120
5

ILLEGAL
GRATUITY
The act of giving or receiving something of
value after a transaction is completed, in
acknowledgment of some influence over
the transaction.

Definition
AUD120
5

ILLEGAL
GRATUITY
An illegal gratuity refers to a form of bribery or corrupt
practice where someone, often a public official or an
individual in a position of authority, receives or accepts
something of value—such as gifts, favors, money, or
services—with the intent to influence their actions or
decisions in a way that benefits the giver of the gratuity.

Definition
AUD120
5

ILLEGAL
GRATUITY
The moment when the offender gives a gift in
response to the decision, or an action made by
someone, or often a public official.

How does it become a fraudulent act?

AUD1205

ILLEGAL
GRATUITY
Specter, a city commissioner negotiated a land
development deal with a group of private investors.
After the deal was approved, the commissioner and
his wife were offered a free international vacation,
with all expenses paid, which the spouse accepted.

Example scenario
AUD1205

ILLEGAL Cont.

GRATUITY
Merely accepting such a gift amounts to illegal
gratuity. There is no need to show that the investors
intended to influence Specter's decision to prove
illegal gratuity; it is enough to show that Specter
accepted an illegal gratuity (free international
vacation with all expenses paid) due to the
successful negotiation.

Example scenario
AUD120
5
ILLEGAL
GRATUITY
Summary

Definition How does it become a

fraudulent act?
Giving or receiving something
The moment when the offender
of value with the intent to
gives a gift in response to the
influence other people's actions
decision, or an action made by
or decisions in a way that
someone.
benefits the giver of the
gratuity.
AUD120
5

FRAUDULENT
DISBURSEMENT
In simple terms, Fraudulent Disbursement happens when
fraudsters tamper with the amounts of cash to be outlaid.

It is a result of deception done by a party to the other

party, failing to appropriate cash disbursement to the right
or actual vendors/accounts.

Definition
AUD120
5

FRAUDULENT
DISBURSEMENT
Accounts payable disbursement fraud involves an
employer issuing a payment based on invoices for
fake goods or services, inflated invoices or personal
purchases. 

Definition
AUD120
5

FRAUDULENT
DISBURSEMENT
The moment someone deceives the other party, driving them to
disburse cash for their benefit, the disbursement becomes a
fraudulent act.

In this case, damage is inflicted to the victim who had been

deceived in a way that the company’s cash had been wrongfully
disbursed.

How does it become a fraudulent act?

AUD1205

FRAUDULENT
DISBURSEMENT
Ghost Employee

Tokyo is La Casa de Papel Company's payroll

manager, and he created a ghost employee
scheme to steal money from the company.
First, Tokyo created a ghost employee named
"Rio" in the company's payroll system.

Example scenario
AUD1205

FRAUDULENT
DISBURSEMENT
Ghost Employee Cont.

Then, she assigns his salary and benefits

package as if he were an actual employee.
Instead of Rio receiving the salary, Rio's
compensation is arranged to a bank account
that actually belongs to Tokyo or her
accomplice to divert the funds.

Example scenario
AUD1205

FRAUDULENT
DISBURSEMENT
Ghost Employee Cont.

To lower the suspicion or cover their tracks,

Tokyo will manipulate the company's record
by generating false attendance records, time
sheets, and other documents that will make
Rio look like an active employee so that the
company will continue to pay Rio.

Example scenario
AUD120
5

FRAUDULENT
DISBURSEMENT
Ghost Employee

1st: Setting up the Ghost Employee

Insert a ghost employee in the payroll system
Assign salary and benefits

2nd: Diverting Funds

Rio’s compensation is funneled to an account controlled by the
fraudster or their accomplice.

3rd: Covering Tracks

Manipulate the company's records.

4th: Repeat

Example scenario
AUD120
5

FRAUDULENT
DISBURSEMENT
Expense Reimbursement Schemes

It is a scheme in which an employee makes a claim for reimbursement of

fictitious or inflated business expenses. One of the examples of Expense
Reimbursement Scheme is Overstated Expenses. In this scheme, the
fraudster intentionally inflates the reported expenses of a company or
organization to obtain personal gain or to inflate the company’s expense
which can save them from paying excess tax.

Example scenario
AUD120
5

FRAUDULENT
DISBURSEMENT
Overstated Expense
1st: Inflating Expense
Intentionally inflate the company’s legitimate expenses.

2nd: Creating fake receipts

Produce fake receipts and documentation for the inflated expenses.

3rd: Recording false expenses

Record the inflated expenses and fake receipts into the company's
accounting system.

4th: Personal Gain

Divert some of the excess funds for her personal use.
Redirect the overpayments to herself.

Example scenario
AUD1205

FRAUDULENT
DISBURSEMENT
Overstated Expense
Badet is an accountant for Intact company.
She has access to the company's financial
records and is responsible for recording
expenses and preparing financial reports.

Since she has the responsibility of recording,

she decided to intentionally inflate the
company’s legitimate expenses such as office
supplies and travel expenses to obtain
personal gain.

Example scenario
AUD1205

FRAUDULENT
DISBURSEMENT
Overstated Expense
To support her activity, she will also produce
fake receipts and documentation for the
inflated expenses that looks legitimate and
includes fake details such as vendor names,
dates, and descriptions of goods or services.

Once done, Badet will now record the inflated

expenses and fake receipts into the company's
accounting system.

Example scenario
AUD1205

FRAUDULENT
DISBURSEMENT
Overstated Expense
As a result of Badet's actions, the company's
financial statements show higher expenses
than what the company has actually spent,
which can lessen the tax paid by the company.

Since Badet is in a position of trust and

authority, she takes advantage of the situation
to divert some of the excess funds for her
personal use.

Example scenario
AUD120
5
FRAUDULENT
DISBURSEMENT
Summary

How does it become a

Definition
fraudulent act?
Fraudulent Disbursement
Damage is inflicted to the victim
happens when fraudsters tamper
who had been deceived in a way that
with the amounts of cash to be
the company’s cash had been
outlaid.
wrongfully disbursed.
AUD1205

ILLEGAL
GRATUTIES
FRAUDULE
NT
DISBURSE
Group 4

MENTS
Castillo | Cenal | Cope | Estrella | Indita | Intia | Logan | Muñoz