Guide to Preventing Workplace Fraud - Chubb Group of Insurance ...

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part of computerized records and are, therefore, not included in any automated system checks and balances. Manual check issuance systems require discipline to safeguard against the entry of fictitious information into company records for an issued check. Additionally, it is important that periodic inventory counts be conducted of blank-check stock to ensure all checks are accounted for and “out-ofsequence” check usage does not occur or go unnoticed. ■ Tracking manually issued checks is not always the same as tracking checks generated by an automated system. As such, it is critical to maintain a record of manual checks, to establish a policy for recording manual checks in the bookkeeping system, and to reconcile these records. ■ Reconciliation thresholds may also need to be adjusted for manual checks. Loss controls related to manual checks should: ■ Assess the need for manual checks. ■ Limit and control the number of people who can authorize issuance of and sign a manual check. ■ Safeguard, limit access to, and periodically inventory blank-check stock. ■ Monitor and enforce mandatory data entry of all manually issued checks. ■ Regularly audit/review manual checks. ■ Reconcile bank statement information on a consistent, regular basis, including follow-up and resolution of all identified differences. 32
Altered, Duplicate, and Counterfeit Company Checks An accomplished “check artist” who obtains a legitimate company check can easily and expertly: ■ “Wash” (chemically erase) information on the check face so that new information can be inserted, ■ Enter or alter the check payee name and address to match false identities, ■ Change the check amount to any amount, and/or ■ Duplicate the check so that it may be converted to cash again and again. How does a check artist get access to a company’s legitimate checks? The check artist may: ■ Be (or arrange to be) a rightful recipient of such a check or know someone who is a rightful recipient, ■ Steal the check, often from the incoming mail in home mail delivery boxes, ■ Purchase the check, at discount, from organized check thieves, or ■ Be an employee of the company, its bank, its check-printing service, the postal service, or any company that rightfully receives a company check or handles the check in any way. Additionally, a check artist is likely to take note of the bank account and bank routing information that appears on the company check. Using this information, check perpetrators can use computers, desktop publishing 33
Page 1 and 2: Guide to Preventing Workplace Fraud
Page 3: GUIDE TO PREVENTING WORKPLACE FRAUD
Page 7: CONTENTS Introduction .............
Page 10 and 11: focus on prevention, detection, and
Page 12 and 13: The Fraud Triangle What motivates p
Page 14 and 15: ■ Minimization: “I’m not taki
Page 16 and 17: Cash-diversion schemes range from s
Page 18 and 19: FRAUD RISK MANAGEMENT- LOSS CONTROL
Page 20 and 21: General fraud detection practices.
Page 22 and 23: ■ “Vendor audits,” which typi
Page 24 and 25: company. Checks with identified inc
Page 26 and 27: ■ Investigate Forms W-2 and 1099,
Page 28 and 29: Segregation of duties may be diffic
Page 30 and 31: In many companies, vendor payments
Page 32 and 33: ■ “Vendor audits,” which typi
Page 34 and 35: The above scenario presents a numbe
Page 38 and 39: software, and color laser printers
Page 40 and 41: Misappropriation of Waste, Scrap, a
Page 42 and 43: Expense Account Reimbursement Fraud
Page 44 and 45: Payroll fraud may involve collusion
Page 46 and 47: ■ Employee correspondence sent to
Page 48 and 49: ■ Design and implement safeguards
Page 50 and 51: ■ Foster a strong “perception o
Page 52 and 53: Many companies require that employe
Page 54 and 55: ■ Callers are asked to call back
Page 56 and 57: ABOUT THIS BOOKLET This booklet was
Page 60: Chubb Group of Insurance Companies

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