Fraud Schemes and Their Consequences

These flashcards cover various financial fraud schemes encountered in the case of Zoe at a restaurant, detailing each scheme and its definition for better understanding.

Skimming

A fraud scheme where cash is stolen before it is entered into the books.

Unrecorded Revenue

Revenue that a business earns but does not record in its accounting records.

Register Manipulation

Altering register entries so reported sales are lower than actual sales.

Fraudulent Voids

Improperly canceling transactions after receiving payment, allowing cash to be stolen.

Deposit Manipulation

Intentionally depositing less money than collected and falsifying documentation.

Destruction of Evidence

Damaging or destroying financial records to conceal fraud.

Check Misappropriation

Using company checks for personal benefit without authorization.

Check Register Manipulation

Altering accounting records to make fraudulent transactions appear legitimate.

Fictitious Expense Inflation

Artificially increasing recorded expenses to conceal theft.

Lack of Segregation of Duties

A major internal control failure where one person controls multiple financial functions.

Occupational Fraud

Fraud committed by an employee or partner against their employer for personal gain.

Insolvency

A financial condition where liabilities exceed assets and the business cannot pay its debts.

Negative Cash Flow

When a business has more money going out than coming in.

Breach of Fiduciary Duty

Failure to act in the best interest of the business or partner when entrusted with responsibility.