Overview

Common indicators, resources and prevention tips for misappropriation schemes executed through larceny.

Description

An individual takes possession of cash or another negotiable financial instrument after the cash has been entered into the company’s records. This is considered an “on-the-books” scheme.

A common scenario involves the theft of currency while the deposit is en route to the bank. An employee entrusted with making the bank deposit takes the cash currency portion of the deposit. To conceal the theft, the employee may supplement a check into the deposit such that the total deposit is the same but the composition of checks and currency is not. The employee may also take checks and deposit them into another account that the employee owns/controls.

Indicia

Bank Deposit Currency Larceny

• For a business that has an established pattern of cash receipts (in currency as opposed to checks), an unexplained change in the level of currency deposits may indicate a cash larceny scheme

Validation Resource(s)

• Comparison of the original bank deposit slip and the bank receipts will reveal differences in the total deposit

• If one person is responsible for both preparing the bank deposit slip and making the bank deposit, then a further comparison of the sales journals cash currency receipts and the cash currency portion of the bank deposits should be performed

Prevention Tips

• Ensure that there is adequate segregation of duties between the individual who prepares the bank deposit slip and the individual who makes the bank deposit

• A supervisor should ensure that the original deposit slip and bank receipt amounts match

Indicia

Check for Cash
Substitution Larceny

• Monies deposited at the bank show a composition of currency and checks different than the original deposit slip (for example, the deposit slip states $100 in currency and $400 in checks for a total deposit of $500; another deposit slip is made that shows $0 currency and $500 in checks)

Validation Resource(s)

• Comparison of sales journals and the original copy of bank deposit slip with the bank records

• If the currency and check portions of the company’s sales records and original bank deposit slip do not match the bank records, then a check for cash substitution larceny has likely been committed

Prevention Tips

• The individual who makes the bank deposit should be required to return the bank receipt to the individual who prepared the original bank deposit slip (hopefully, these are two employees)

• A supervisor should ensure that the original bank deposit slip and bank receipt match

• Use of a daily remote deposit option may reduce the opportunity for this type of scheme