ACFE - Accounting Schemes
Terms in this set (85)
Credit card-sized plastic embossed w/ account numbers and names often used in collusion with corrupt merchants
3 categories of PAYROLL FRAUD
1. Ghost EE
2. Falsified hours/salaries
3. False commissions
AUTHORIZED MAKER Scheme
Check-tampering scheme in which an employee authorized to sign on a company account writes fraudulent checks for her own benefit and signs her own name as maker
4 classes of ASSET VALUATION SCHEMES
1. Inventory Valuation
2. Accounts Receivable
3. Business Combinations
4. Fixed Assets
ALTERED PAYEE Scheme
Check tampering scheme in which a check is intercepted and the payee designation is altered
PHANTOM BILLING HEALTH CARE FRAUD Scheme
Providers charge or bill for services that were never rendered
FICTITIOUS EXPENSE REIMBURSEMENT Scheme
An EE makes up an expense and requests reimbursement for it
FORGED MAKER Scheme
Check tampering scheme in which an employee misappropriates a check and forges the signature of an authorized maker
CREDIT DATA BLOCKING
When a borrower fraudulently suppresses his negative credit history to get a loan he couldn't get otherwise.
A person or entity that provides telemarketing scammers with the phone lists, credit card receipts, autodialers, etc. they need to operate.
Targets people that share a social connection (religious groups, racial minorities, professional organizations)
Code in a legitimate program that sets off a malicious function when certain conditions are met
EE intentionally sends a payment to a legitimate vendor when no money is actually owed to the vendor, then requests the vendor to return the payment, then pockets the money
Agents falsely telling customers that they can get additional insurance for free by using built-up value in their current policies
5 classes of FINANCIAL STATEMENT FRAUD
1. Fictitious revenues
2. Timing differences
3. Improper Asset Valuations
4. Concealed liabilities and expenses
5. Improper disclosures
Use of illegal, clandestine means to acquire information for commercial purposes.
NON-CONFORMING GOODS/SERVICES FRAUD
Fraud scheme in which a contractor delivers goods or services that do not conform to the underlying contract specifications.
The unauthorized transmission of data from within a company to an outside destination.
When a consumer's telephone or electric service is switched from one company to another without his knowledge or consent.
4 CHECK TAMPERING SCHEMES
1. Forged Maker
2. Forged Endorsement
3. Altered Payees
4. Authorized Maker
COMMON METHODS USED TO INFLATE HEALTH CARE BILLINGS
2. Added Services
3. Code Manipulation
TRAPDOOR re: Information Security
A secret entry point into a program that bypasses usual security access procedures.
Malware used to simplify or automate criminal activity online.
SUSPICIOUS ACTIVITY REPORT (SAR)
Reports that financial institutions have to file with the Financial Crime Enforcement Network on transactions that have a heightened risk of criminal activity.
Improper, undisclosed payments made to get favorable treatment.
RECEIVABLES SKIMMING Scheme
EE steals a payment made by a customer and lets the customer's account appear delinquent.
FICTITIOUS REVENUE Scheme
Recording revenue from the sale of good or services that did not occur. Could be fictitious or legitimate customers used to pull of the scheme.
EE in the purchasing department of a company sets up a shell company, buys merchandise through the shell company, and sells it back to the ER company at an inflated price.
Shifting revenues or expenses between periods to increase or decrease earnings and give the illusion of a more stable enterprise.
Falsely promising the delivery of a product or service in exchange for an upfront fee
DAISY CHAIN Scheme
Banks buying, selling, and swapping bad loans, creating new documentation in the process, to make the bad loans look like they are recent and good.
FICTITIOUS REFUND Scheme
Cashier processes the transaction as if a customer were returning merchandise, when there is no actual return, and then takes the amount of the false return out of the register.
2 types of REGISTER DISBURSEMENT Schemes
1. False Refunds
2. False Voids
3 types of COST MISCHARGING Schemes
1. Accounting mischarges
2. Material mischarges
3. Labor mischarges
2 types of CASH RECEIPT Schemes
2. Cash Larceny
FALSE INVENTORY SHIPMENT Scheme
EE creates false shipping documents and false sales documents to make it appear that stolen property was sold rather than stolen
NEED RECOGNITION Scheme
Procurement EE convinces his ER (the purchasing entity) that it needs excessive or unnecessary products or services
FICTITIOUS PROVIDER HEALTH CARE FRAUD Scheme
Perp sets up a fictitious provide and fraudulently uses a real provider's identifier and list of patient I.D. info. To bill Medicaid. Medicare, and other health care programs.
PREMIUM THEFT Scheme
Insurance premiums are collected by an agent but not submitted to the insurance company.
4 methods to conceal INVENTORY SHRINKAGE
1. Altering Inventory Records
2. Recording fictitious sales and accounts receivable
3. Writing off inventory and other assets
4. Physical padding
A perpetrator tricking another into providing sensitive data (i.e., acct numbers and passwords) by claiming to be from an actual business, bank, etc. with which the target does business.
PREMIUM THEFT Scheme
Insurance premiums are collected by an agent but not submitted to the insurance company.
A perp using text messages or other short message services to trick an individual or business to provide sensitive data by falsely claiming to be from an actual business, bank, ISP, etc.
EE involved in a telemarketing scam who reads vague words about the deal and records the victim's agreement.
BLOCK HUSTLE Scheme
Someone who sells imitation or stolen goods on the street
Self-replicating computer program that gets into operating systems and spreads malicious code to other computers.
1. Theft of ATM card, access codes, and PIN's
2. EE manipulation
3. Counterfeit ATM cards
4. Counterfeit ATM's
5. Magnetic strip skimming devices
6. ATM deposit fraud
Leveraging VOIP to falsely claim to be a legitimate enterprise in an attempt to scam users into disclosing personal info.
FRAUDULENT DISBURSEMENT Scheme
Distribution of company funds for a dishonest purpose.
FORGED ENDORSEMENT Scheme
EE intercepting a company check intended to pay a 3rd party and converts the check by signing the 3rd parties name.
Separating a medical procedure code into separate components to increase charges
Previously conned V is targeted for an advanced fee by a bogus company that claims to assist fraud V's in recovering stolen money.
MISCHARACTERIZED EXPENSE REIMBURSEMENT Scheme
Requesting reimbursement for a personal expense by claiming that the expense is business-related.
JOURNAL ENTRIES TO BE EXAMINED WHEN LOOKING FOR A SKIMMING SCHEME
1. False credits to inventory
2. Write-offs of lost, stolen, or obsolete inventory
3. Write-offs of accounts receivable
4. Irregular entries to cash
Automated process by which an attacker tries to guess a system user's most likely passwords.
CHANGE ORDER ABUSE Scheme
Corrupt contractor submits a low bid to get the contract award and then increases its price w/ subsequent change orders after it is awarded the K.
Common HOSPITAL HEALTH CARE FRAUD Schemes
1. Filing of false cost reports
2. DRG Creep
3. Billing for experimental purposes
4. Improper contractual relationships w/ doctors
5. Revenue recovery firms (knowingly or unknowingly) to bill extra charges
4 Requirements for GHOST EE Scheme
1. Ghost must be added to the payroll
2. Timekeeping and wage rate must be collected
3. A paycheck must be issued to the ghost
4. The check must be delivered to the perp or an accomplice
SHAM LOAN Scheme
A loan officer makes a loan to an accomplice, who then shares all or part of the loan with the loan officer.
Obtaining property from another through the use of actual or threatened force or fear.
RENT-A-PATIENT Health Care Fraud Scheme
A provider or other party pays someone to undergo an unnecessary medical procedure and then bills the patient's insurance for the procedure.
CASH LARCENY Scheme
On-book fraud scheme in which an employee physically misappropriates cash that has already appeared on the victim company books.
FALSE SALE INVENTORY THEFT Scheme
An accomplice of an employee pretends to buy merchandise, but the employee does not ring up the sale, allowing the accomplice to take the merchandise without paying.
UNRECORDED SALES SKIMMING Scheme
When an EE pockets cash received from a customer in a sales transaction and makes no record of the sale
ACCOUNT TAKEOVER Scheme
Perpetrator gains access to a customer's bank account, usually through online banking, and conducts unauthorized transactions.
Target a specific organization in which messages are sent by a Per that are made to look like they come from the IT or HR Department of the company are sent to EE's requesting their UN and PW's to obtain access to the company network.
Common FINANCIAL INSTITUTION EMBEZZLEMENT Schemes
1. False accounting entires
2. Unauthorized disbursement of funds to outsiders
3. Unauthorized withdrawals
4. Moving $ from customers' inactive accounts
5. Unauthorized, unrecorded cash payments
Insurance Fraud PAPER ACCIDENT Scheme
The fabrication of an auto accident that only occurs on paper, made possible by the unlikelihood that an insurance company will investigate a small dollar value claim.
Exploiting a bug, design flaw, configuration oversight, or other vulnerability in an operating system or software application to gain access that is beyond the user's authorized access level.
A method used by identity thieves to obtain info. By overhearing conversations or covertly observing the input of credit card numbers, account info, or PIN codes into machines or documents.
What is a GHOST EE
A real or fictitious person in the payroll who does not actually work for the victim company.
Attacks that use BOTNETS to send massive amounts of phishing emails to huge volumes of internet users.
FINANCIAL STATEMENT FRAUD Scheme
Deliberate misrepresentation of the financial condition of a company through the intentional misstatement or omission of amounts or disclosures in the financial statements in order to deceive.
3 Types of BILLING Schemes
1. False invoice via shell companies
2. False invoice via nonaccomplice vendors
3. Personal purchases w/ company funds
COMPLIMENTARY BIDDING Scheme
Competitors submit token bids that are not serious attempts to win the K.
UNDERSTATED SALES SKIMMING Scheme
When a legitimate sales transaction is recorded, but the EE records the sale at a lower price and pockets the difference.
2 Ways to MISAPPROPRIATE NON-CASH ASSETS
Illegal business practice in which a perp uses new investor's money to make payments to earlier investors.
OVERSTATED REFUND Scheme
An EE overstates the amount of a legitimate refund and pockets the extra money.
2 Ways to FRAUDULENTLY INFLATE A COMMISSION
1. Falsify the amount of sales made
2. Increase the commission rate
REGISTER DISBURSEMENT Scheme
Stealing cash from a register and recording its removal as a legitimate transaction.
A business entity w/ no physical presence and no EE's that generates little (if any) independent economic value.
An experienced EE involved in a telemarketing scam to whom interested callers are transferred.
DOUBLE-PLEDGING COLLATERAL Scheme
Borrowers pledge the same collateral w/ different lenders before liens are recorded and w/out telling the lenders.
Medical staff members manipulate diagnostic and procedural codes to get more money from reimbursements
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THIS SET IS OFTEN IN FOLDERS WITH...
CFE-Financial Transactions and Fraud Schemes 2