Which check tampering red flag may indicate employees have embezzled cash and charged the embezzlement to expense accounts?
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A. B. C. D.C
In the context of fraud and embezzlement, check tampering refers to the act of altering or manipulating checks for personal gain. The question asks which check tampering red flag may indicate that employees have embezzled cash and charged the embezzlement to expense accounts. Let's analyze each option to determine the most suitable answer:
A. Voided checks: Voided checks by themselves do not necessarily indicate embezzlement. Voiding a check could be a legitimate action due to various reasons, such as errors in writing the check or a change in payment arrangements. Therefore, voided checks are not the best indicator of employees embezzling cash and charging it to expense accounts.
B. Payable checks: Payable checks are checks that are written and issued to pay legitimate expenses or suppliers. While fraudulent activities can occur with payable checks, they may not specifically indicate embezzlement. Misappropriation of payable checks could involve diverting the funds to personal accounts or colluding with external parties. However, this option does not directly suggest that cash is being embezzled and charged to expense accounts.
C. Missing checks: Missing checks, especially when combined with other red flags, could be a strong indication of fraudulent activity. If employees are embezzling cash and charging it to expense accounts, they may intentionally remove certain checks from the check sequence to avoid detection. This allows them to write fraudulent checks, record them as legitimate expenses, and pocket the cash. Therefore, missing checks are a possible red flag for embezzlement.
D. Duplicate checks: Duplicate checks refer to checks that have been issued with the same check number and are used to perpetrate fraud. The fraudulent employee may issue a duplicate check to themselves, deposit it into their personal account, and charge it as a legitimate expense. Duplicate checks can be a significant red flag for check tampering and embezzlement.
Considering the options provided, the most suitable answer that indicates employees have embezzled cash and charged the embezzlement to expense accounts is:
D. Duplicate checks.
Please note that this response is based on the general understanding of the terms and concepts related to check tampering and embezzlement. The specific exam question and answer choices may have additional context that could influence the correct response.