The Fraud Audit: Responding to the Risk of Fraud in Core Business Systems

Appendix F

Checklist of Inherent Scheme Structure

Entity Structure

False Entity

• Created: entity created for the purpose of committing the fraud scenario.
  • Legally created: Entity created to commit the scheme.
  • Not legally created: Entity that was not legally created.
• Assumed: Taking over the identity of an entity for the purpose of committing the fraud scenario.
  • Internal entity: A real entity already in the internal master file.
  • External entity: A real entity external to the company.

Real Entity

• Complicit: A real entity that is knowingly involved in a fraud scenario.
  • Individual working in the entity.
  • Company/owner.
• Not complicit: A real entity that is unknowingly involved in a fraud scenario.

Disbursement Chapter

False Entity

• False billing:
  • Entity: False entity either created or assumed.
  • Action: Payment for services or an event that did not occur.
• Pass-through billing:
  • Entity: False entity either created or assumed.
  • Action: Payment for services or an event that did occur.

Real Entity

• Overbilling:
  • Entity: A real entity.
  • Action: Overcharging on invoices.
• Speed of disbursement:
  • Entity: A real entity and an internal employee.
  • Action: Funds disbursed after they were entitled.

Payroll Chapter

False Entity

• Fictitious ghost employee:
  • Entity: A false created employee.
  • Action: Payment for services that did not occur.
• Terminated ghost employee:
  • Entity: A false assumed employee.
  • Action: Payment for services that did not occur.
• Temporary ghost employee: