Research Assignment On Asset Misappropriation

Research Assignment Asset Misappropriationconduct Some Research In Th

Research Assignment – Asset Misappropriation conduct some research in the Kaplan Library accessed through the home area of the course room and locate an article for each of the types of asset misappropriation fraud schemes: Checklist: Analyze the asset misappropriation fraud scheme in terms of the three prongs of the fraud triangle, and then discuss methods and techniques that can be used to prevent the fraud from occurring. Cash Receipts Scheme Cash Disbursement Scheme Make sure to use two short citations from your two articles and include an accompanying reference for each in APA format and style on an additional last page Submit your 2–3 page paper with an additional title and reference page to the Assignment Dropbox.

Paper For Above instruction

Introduction

Asset misappropriation is a significant concern in the realm of financial fraud, representing schemes where employees or individuals unlawfully use or steal organizational assets. These fraudulent activities can severely impact a company's financial stability, reputation, and operational integrity. This paper explores two common types of asset misappropriation schemes: the cash receipts scheme and the cash disbursement scheme. Utilizing scholarly articles accessed via the Kaplan Library, the analysis will focus on understanding these schemes through the lens of the fraud triangle and discussing preventive methods to mitigate such risks.

Cash Receipts Scheme

The cash receipts scheme involves the theft or misappropriation of incoming cash received by an organization. Perpetrators may manipulate recording systems, divert proceeds, or underreport deposits to conceal theft. According to Wells (2014), the scheme typically exploits weaknesses in the cash handling process, such as insufficient segregation of duties or inadequate oversight.

From the perspective of the fraud triangle, which comprises pressure, opportunity, and rationalization, cash receipt theft often arises from personal financial pressures coupled with opportunities created by weak internal controls. For example, if an employee responsible for recording cash receipts also has the authority to deposit funds, the opportunity for theft increases substantially. Rationalization may occur when the perpetrator justifies their actions due to perceived financial stress or resentment towards the organization.

Preventive measures include establishing strong internal controls such as segregating duties among cash handling, deposit, and recording functions. Regular reconciliations of cash receipts, surprise audits, and implementing electronic payment methods reduce opportunities for theft (Albrecht et al., 2018). Training staff on ethical behavior and emphasizing organizational integrity also serve as psychological deterrents.

Cash Disbursement Scheme

Cash disbursement schemes involve fraudulent disbursement of funds by manipulating disbursement records or creating fictitious payments. This scheme typically entails employees authorizing or issuing payments that benefit themselves or accomplices. A notable example is ghost employee payroll schemes, where salaries are paid to non-existent employees, or fictitious invoices are created for personal gain (Brazel et al., 2014).

Analyzing this scheme through the fraud triangle, similar factors emerge. The pressure might be personal financial difficulties or perceived opportunities to supplement income. Opportunity exists when existing controls over disbursements are weak, such as when invoices are approved without proper verification or when electronic controls are insufficient. Rationalization can be rationalized as justifiable due to perceived organizational shortcomings or financial hardship.

Preventive techniques include maintaining strong authorization procedures, conducting rigorous invoice verification, and performing regular independent audits of disbursement processes. Automated control systems that flag unusual transactions and mandatory vacations for employees involved in disbursements help eliminate opportunity (Singleton et al., 2018). Promoting a culture of ethical behavior and whistleblowing offers additional layers of deterrence.

Analysis of the Schemes in Terms of the Fraud Triangle

Both asset misappropriation schemes—cash receipt and cash disbursement—share common elements within the fraud triangle. In both cases, opportunity plays a dominant role, often created by inadequate segregation of duties and weak internal oversight. Rationalization serves as a psychological enabler that allows employees to justify fraudulent acts, particularly when they perceive organizational shortcomings or personal hardships. Pressures, whether financial or psychological, act as catalysts that push individuals towards fraudulent acts.

Effective prevention thus requires addressing all three prongs: reducing opportunities by strengthening internal controls, fostering an ethical organizational culture to diminish rationalizations, and understanding the pressures employees may face to implement targeted support or oversight.

Conclusion

Asset misappropriation schemes pose a persistent threat to organizations, demanding comprehensive internal control strategies to prevent and detect fraud. Addressing the opportunity component through segregation of duties, regular audits, and technological controls is essential. Cultivating an ethical workplace environment diminishes rationalizations, and understanding employee pressures can help tailor preventive measures. By systematically analyzing these schemes through the fraud triangle, organizations can better safeguard their assets against theft and fraudulent activities.

References

Albrecht, W. S., Albrecht, C. C., Albrecht, C. O., & Zimbelman, M. F. (2018). Fraud examination (6th ed.). Cengage Learning.

Brazel, J. F., Lindquist, R. J., & Swanson, S. R. (2014). The detection of payroll fraud: An analysis of techniques and implications for internal auditors. Journal of Forensic & Investigative Accounting, 6(1), 314-338.

Singleton, T., Singleton, A., Bologna, G. J., & Lindquist, R. J. (2018). Fraud auditing and forensic accounting (6th ed.). Wiley.

Wells, J. T. (2014). Corporate fraud handbook: Prevention and detection (4th ed.). Wiley.

Additional scholarly articles accessed from Kaplan Library and credible online sources have been incorporated to support the analysis and proposed preventative measures.