Question

4. Sales skimming is called an "off-book" fraud. why?

5. In the case study of Stefan Winkler, chief financial officer for a beverage company in Florida, how did he conceal his skimming scheme? How could the scheme have been prevented or discovered?

Answer 1

Answer:

4.

Skimming is the theft of cash from a victim entity prior to its entry in an accounting system.becuase the cash is stolen before it has been recorded in the victim companies books, skimming schemes are known as "off-book" frauds.

5.

Winklers scheme is a classic example of too much trust placed in one employee.the beverage company received money from two different sources: route deposits (cash sales) and office deposits (Accounts receivable). The route sales people prepared their own deposit slips showing the cash and currency collected.the office personnel listed and accounted for the cheks received through the mail.winkler removed currency from the route deposits and replaced with a check for the same amount from office deposits.Although office personnel listed the checks, they did not prepare the deposit slips-winkler did that. As a result,he would ensure that the bank deposits agreed with the amount of money going into the bank.

To cover his tracks with the credit customers, Winkler would lap payments made by one customer to cover thefts from another customer. He would also give unauthorised discounts to credit customers. When Winkler was fired for other reasons,he made a general ledger adjustments of over $300,000 in a vain attempt to cover the shortages.

There were many clues: the internal control deficiencies were glaring. All of the cash made a stop at winklers desk on its way to the bank. Had there been adequate division of responsibilities, winklers scheme would have been much more difficult to accomplish. There were excessive false discounts to customers.the cost of sales would have been out of line with sales. And, like so many other fraudsters, Winkler lived beyond his means. Had his fellow employees been properly educated about fraud,they would have easily seen the fact that Winkler was driving a $75,000 car as a red flag. Also,had they been to his home, they would have noticed that their chief financial officer lived in an excessively expensive residence.