There are a number of ways in which an individual can commit fraud by stealing cash from a business. Since cash is essentially untraceable once stolen, someone intent on stealing assets will be particularly focused on this type of asset. Here are several ways in which cash fraud can be committed:
- Intercept at cash register. An employee could pocket cash at the cash register, and never ring up the sale on the register. This approach can be detected after the fact by comparing actual inventory levels to the amount of sale transactions. If the inventory level is lower than indicated by the cash register transactions, someone may be removing cash.
- Intercept in mail room. Though rare, it is possible that a customer will send cash through the mail in payment of an invoice. If so, a mail room clerk can pocket the mailed cash and destroy the letter in which it came. Since there is no in-house evidence that the cash ever arrived, a reasonable claim can be made that the payment was lost in the mail. This theft can be prevented by having two people jointly open the mail.
- Intercept at cashier. The cashier can remove cash and simply not record the associated transaction in the accounting records. This issue can be detected after the fact by recording the amount of cash prior to delivering it to the cashier, and then comparing the initial record to the cashier's record of cash received.
- Intercept in deposit pouch. The person delivering cash deposits to the bank can remove cash from the pouch on the way to the bank. This issue can be mitigated by handing off the cash to an armored truck for delivery. It can also be detected after-the-fact by comparing the deposit slip from the bank to the cashier's record of cash received.
- Petty cash removal. One of the easier ways to abscond with cash is to take cash out of the petty cash box when it is unguarded. Another option is to steal the entire box, thereby ensuring that all cash and coins are removed. This can be prevented by switching from petty cash to the use of procurement cards.
- Pay envelope removal. A person could remove cash from pay envelopes before they are delivered to employees. This issue can be detected by having employees count the cash in their pay envelopes and signing for receipt of the envelopes.
Note that all of the preceding types of cash fraud are perpetrated by corporate insiders.
The activities noted here only relate to the theft of cash, which means bills and coins. We have excluded from the discussion any fraud related to payments made by check, ACH, or wire transfer.