The most common form of skimming is not recording the sale of goods but collecting the money from the customer. Despite controls such as register tape, managers, and surveillance equipment, employees may be able to manipulate the system in order to prevent fraud detection. In some examples of unrecorded sales, the fraudster manipulates the register tape so that it does not print on the tape when transactions are keyed into the system. A means of detection would be pre-numbering the system records so that if skimming were perpetrated when the fraudster turn the register tape back on there would be a break in the pre-numbered transactions. Companies should be specifically careful of unrecorded sales schemes with revenue streams that are difficult to monitor and generally unpredictable in value.
Understated Sales and Receivables
In these skimming schemes the customer receives a receipt that is for the total amount of the transaction but when the employee enters it into the system they record either a discount or a sale of lesser value. In order to cover their tracks they can manipulate carbon copies of the receipt by writing in their own amounts or generating false discount documentation. Fraud prevention is possible by requiring approval for sales discounts, checking receipts for alterations and tracking the history of cashiers’ sales discounts.
Theft of Checks Through the Mail
In this particular scheme the sale has been recorded into the company’s system but the payment on the receivable has not been received. The person in charge of receiving payment in the company physically steals the check and cashes it at the bank. If the employee is able to overcome the issues with cashing the checks such as endorsement and convincing the bank that the transaction is legitimate then they must deal with how to conceal the fraud when the customers balance becomes delinquent. If the employee is not careful the company will send late notices to customers that will likely result in complaints from customers with a copy of the canceled check. Fraudsters have gone around this by intercepting the notices or manipulating the address of the customer in order to reroute the mail. A major red flag for the opportunity to commit this scheme is when the employee that receives the mail is also the same person that has the job of recording the receipt. By properly segregating duties and marking all checks for deposit only, a company can easily reduce the potential of this skimming scheme.
The final category of short-term skimming is less about stealing the money than borrowing it in order to accumulate earnings from the time value of money. By delaying the receipt of payment the employee is able to use the funds for short term investments generating interest for the perpetrator. The means of obtaining access of the money could be any of the forms above but there is a clear distinction that in this case the money is eventually returned to the company and the only loss is the time value of that receipt. Red flags in this area would include a higher days sales outstanding ratio or unusual payment timing when compared to historical customer payment especially when looking at specific customers.