Definitions Flashcards
Occupational Fraud and Abuse
the use of one’s occupation for personal
enrichment through the deliberate misuse or misapplication of the employing organisation’s resources or assets
Financial statement fraud
the deliberate misrepresentation of the financial condition of an enterprise accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statements to deceive financial statement users.
Channel stuffing (trade loading)
sale of an unusually large quantity of a product to distributors, who are encouraged to overbuy through the use of deep discounts or extended payment terms
The current ratio
current assets to current liabilities
The quick ratio, often referred to as the acid test ratio
Cash+Securities+Receivables to current liabilities
Receivable turnover
net sales on account
divided by average net receivables
COLLECTION RATIO
It divides 365 days by the receivable turnover ratio
INVENTORY TURNOVER
Cost of Goods Sold to Average Inventory
AVERAGE NUMBER OF DAYS INVENTORY IS IN STOCK
It divides 365 days by Inventory Turnover
The debt to equity ratio
dividing total liabilities by total equity
Profit margin ratio
net income divided by net sales
ASSET TURNOVER
Net sales divided by average operating assets
Cash Larceny
theft of money that has already appeared on a victim organisation’s books
Skimming
removal of cash from a victim entity prior to its entry in an accounting system
Lapping
crediting of one account through the bstraction of money from another account
Cheque tampering schemes
the perpetrator takes physical control of a cheque and makes it payable to himself through one of several methods.
“Maker” of the cheque
person who signs a cheque
A forged maker scheme
a cheque tampering scheme in which an employee misappropriates a cheque and fraudulently affixes the signature of an authorised maker thereon.
Forged endorsements
cheque tampering schemes in which an employee intercepts a company cheque intended to pay a third party and converts the cheque by endorsing it in the third party’s name
Pass-through schemes
Instead of buying merchandise directly from a vendor, the employee sets up a shell company and purchases the merchandise through that fictitious entity. He then resells the merchandise to his employer from the shell company at an inflated price.
Pay-and-Return Schemes
an employee intentionally mishandles
payments that are owed to legitimate vendors, then call the vendor and request that cheque be returned. The clerk then intercepts the returned cheque.
Ghost Employees
someone on the payroll who does not actually work for the victim company
Larceny
Felonious stealing, taking and carrying, leading, riding, or driving away another’s personal property, with intent to convert it or to deprive owner thereof. The unlawful taking and carrying away of property of another with intent to appropriate it to use inconsistent with latter’s rights.
Inventory shrinkage
Unaccounted-for reduction in the company’s inventory that results from theft