Are Your Check Transactions Secure Enough?

Published date01 November 2013
AuthorJ. Ralph Byington,Jo Ann McGee
Date01 November 2013
© 2013 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.21902
Jo Ann McGee and J. Ralph Byington
According to the
Association of
Certified Fraud
Examiners (ACFE),
asset misappropriation
involves the misuse or
theft of an organiza-
tion’s assets (ACFE,
2012). This type of
white-collar crime
(WCC) can be subdi-
vided into two types:
(a) noncash misappropriations
such as inventory or equipment;
and (b) cash misappropriations
(CMs), which includes cur-
rency, checks, and money orders.
Clearly, cash is the most com-
monly targeted asset. The ACFE
reported in its 2010 Report to
the Nations on Occupational
Fraud and Abuse that the mis-
use or theft of cash represented
85% of asset misappropriations
with the median cost of cash
schemes varying from $23,000
to $131,000 based on the type of
scheme (ACFE, 2010).
Reports of CMs by dis-
honest employees appear in
the press on a daily basis. As
examples, recent stories involve
embezzlements of: (a) $500,000
by a former synagogue president
(Glista, 2013), (b) $482,144 by an
Cash misappropriations—which include currency,
checks, and money orders—is the most com-
mon target of white-collar criminals. And check
tampering is one of their most common methods.
This article explains the different types of check
tampering schemes that dishonest employees
use—and how to prevent and detect them.
© 2013 Wiley Periodicals, Inc.
Are Your Check Transactions
Secure Enough?
American Red Cross employee
(Griffin, 2012), and (c) $500,000
by a Trident Seafoods employee
(Barrett, 2013). One of the most
common methods employed
by the perpetrators of this type
of WCC is check tampering.
Therefore, the question begs, are
your check transactions secure
enough? The purpose of this
article is to make the chief execu-
tive officer (CEO), chief financial
officer (CFO), and the treasurer
aware of the types of check tam-
pering (CT) schemes being per-
petrated by dishonest employees,
as well as how to prevent and
how to detect CT schemes.
Cash misappropriation
schemes are generally divided
into three catego-
ries: (a) fraudulent
disbursements, (b)
skimming, and (c)
cash larceny. Of the
three categories,
fraudulent dis-
bursements occur
most often (ACFE,
2012). Fraudulent
disbursements occur
when the perpetra-
tor causes the organization to
disburse funds through some
device or trick. For example, the
American Red Cross employee
doubled her salary through
the use of technology. She also
manipulated vacation and com-
pensation time to increase her
paycheck (Griffin, 2012).
Examples of fraudulent
disbursements may occur in bill-
ing, payroll, check tampering,
expense reimbursement, and
register disbursement schemes.
Check tampering schemes are
unique among fraud disburse-
ments because the fraud per-
petrator actually prepares the
check, while the other schemes
rely on trickery in that the
company is fooled into making
a payment to the perpetrator
(Albrecht, Albrecht, & Albrecht,

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