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Check Tampering. Check Tampering. Forged Maker. Forged Endorsement. Altered Payee. Concealed Checks. Authorized Maker. Frequency of Fraudulent Disbursements. Comparison of Median Loss of Fraudulent Disbursements. Dollar Loss Distribution- Check Tampering Schemes.
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Check Tampering Forged Maker Forged Endorsement Altered Payee Concealed Checks Authorized Maker
Median Loss by Number of Employees – Check Tampering Schemes
Check Tampering Schemes • Perpetrator • What must the perpetrator have to do perpetrate this type of scheme?
Forged Maker Schemes • What is this? • What must the perpetrator be able to do in order to perpetrate this fraud?
Obtaining the Check • Employees with access • Employees without access • Counterfeit
How Should Checks be Safeguarded? • Lock and key • Limited access • Blank checks • Periodically checks • Voided checks • Watermark paper • Out-of-sequence canceled checks and duplicate check numbers • Daily reconciliation
To Whom Is The Check Made Payable? • Perpetrator • Accomplice • “Cash” • Vendors
Forging the Signature • Free-hand • Photocopied • Automatic check-signing instruments
How can Forged Maker Schemes be Prevented and Detected? • Blank checks • Rules • Separation of duties • Rotation • Limited access
Forged Maker Schemes • Miscoding • Concealing
Forged Endorsement Schemes • Interception • Third party signature
Intercepting Checks Before Delivery • Employee • Controls • Theft • Rerouting • Converting
Preventing and Detecting the Theft of Outgoing Company Checks • Separation of duties • Trained employees • Complaints • Duplicate payments
Preventing and Detecting the Theft of Outgoing Company Checks • Restricted changes • Periodic reporting • Canceled checks • Date of mailing
Altered Payee Schemes • Intended for a third party • Payee designation altered • Reduced discovery
Altering Checks Prepared by Others • Inserting new payee • “Tacking on”
Altering Checks Prepared by the Fraudster • Erasable ink • Blank checks
Preventing and Detecting Altered Company Checks • Separation of duties • Check the canceled check versus book entry
Concealed Check Schemes • What is it? • When does this typically happen?
Authorized Maker Schemes • What is it? • How is it done?
Preventing and Detecting Check Tampering by Authorized Makers • Check signer • Separation of duties • Dual signatures • Vendor lists
Concealing Check Tampering • Tough to do!! • What could happen?
Concealing Check Tampering • bank reconciliation • Re-alteration of checks • Falsifying the disbursements journal • Reissuing intercepted checks • Bogus supporting documents