Exotic Embezzling: Investigating Off-Book Fraud Schemes

Document Type

Article

Publication Date

1-1-2004

Publication Title

Journal of Financial Crime

DOI

10.1108/13590790410809167

ISSN

1359-0790

Abstract

Defines on‐book and off‐book fraud: the former occurs when theft takes place after the recording of money on the victim company’s books, the latter when it occurs after recording, and types of such fraud can involve billing, payroll, expenses, cheque tampering, and register disbursement. Describes methods of investigating off‐book fraud: financial statement analysis, undercover surveillance, invigilation, and admission‐seeking interviews. Gives a case study concerning the Northern Exposure club, where so much skimming occurred that only 10% profits were being made after tax instead of the 30% expected; details how the fraud investigators proceeded by generating fraud theories based on the controls, or lack of, for monitoring cash flows, then collecting and evaluating evidence, estimating the losses incurred, and so on.

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