Overview
1. Intermediate Accounting
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Juan Lopez
Aug 7 9:57pm| Last reply Aug 8 10:15am
Reply from Juan Lopez
Hello Class,
While reading The Definitive Guide to Accounts Receivable Fraud, the part about lapping schemes really caught my attention. In this kind of scheme, an employee steals a customer’s payment and then tries to cover it up by using a later payment from another customer to fill the gap. This cycle can go on for a while and be tough to catch if there aren’t strong checks in place. It just shows how accounts receivable can be an easy target when there’s not enough oversight.
To stop this kind of fraud, it’s important to have good internal controls. One of the best ways to prevent it is by separating duties. The person who records the payments shouldn’t be the same one who handles or deposits the money. This way, no one has full control over the process. Another helpful tool is using lockbox banking, where customer payments go straight to the bank instead of through employees. That cuts down the chances of someone tampering with the funds.
If I were running a business, I’d make sure to do regular reconciliations and throw in some surprise audits now and then to catch anything suspicious early. I’d also keep a close eye on aging reports and compare them to what’s actually coming in, so any delays or strange activity could be spotted quickly.
Learning about lapping schemes made me realize how important it is that no single employee has full control over the accounts receivable process. I’d also make sure my team gets regular training on fraud prevention and that we keep reviewing and updating our internal controls to stay ahead of any risks
The Definitive Guide to Accounts Receivable Fraud. (n.d.). Case IQ. https://www.caseiq.com/resources/the-definitive-guide-to-accounts-receivable-fraudLinks to an external site./
Albrecht, W. S., Albrecht, C. C., Albrecht, C. O., & Zimbelman, M. F. (2019). Fraud examination (6th ed.). Cengage Learning.
2. Intermediate Accounting
(250 words for discussion board reply) (APA format)
(in-text citations are a must)
(article is attached)
No Plagiarism
No use of Artificial Technology
Ashleigh Ko
Aug 7 9:31pm
Reply from Ashleigh Ko
Per the article, The topic I chose to speak about is Fraudulent write off. This occurs when an employee manipulates the AR ledgers by falsely making legitimate debts as un collectible . Fraudsters do this by hiding the theft of incoming payments, cover up errors or shortages and illegally benefit a customer or related party. This type of fraud is very dangerous because it can go undetected for many weeks.
Companies can prevent fraudulent write offs by Implement Segregation of Duties: This prevention works well. It means that the person who applies a payment is not the same person that approves the write offs. My current company does this as well. Any Write off, CM, has to be reviewed by another person of the accounting team. The person who applies the payment can never create the write off or Credit memos. It prevents any fraud and has worked wonderfully.
Use audit trails and software controles. Accounting systems should maintain detailed logs of who initiates and approves each write-off.The logs should be approved separately. And lastly employee training should be mandatory.educate staff on the consequences of financial fraud and encourage a culture of integrity
In a real-world role, a stricter control around the write-off process. Specifically, I would Recommend that all write-offs over a certain dollar amount require two levels of approval. And develop monthly exception reports that would highlight unusual patterns that may be questioned by the auditing team.. By tightening these controls, we create both a deterrent to fraud and a framework to detect it quickly if it occurs.
Citation:
“The Definitive Guide to Accounts Receivable Fraud.” Case IQ, 27 Apr. 2023, www.caseiq.com/resources/the-definitive-guide-to-accounts-receivable-fraud/.