Final Answer:
Fraud in the B/AR/CR process encompasses billing schemes, ghost employees, and unauthorized disbursements. Billing fraud involves manipulating invoices, ghost employees lead to illicit salary collection, and unauthorized disbursements result in misappropriated funds. Prevention involves rigorous invoice verification, employee roster reviews, and implementing controls like dual authorization for disbursements.
Step-by-step explanation:
Fraud within the Billing/Accounts Receivable/Cash Receipts (B/AR/CR) process can take on various deceptive forms, presenting substantial risks to organizational finances. One prevalent scheme involves billing fraud, where perpetrators create fictitious invoices or manipulate existing ones to siphon funds illicitly. This deceptive tactic often leads to financial losses, as payments are made for non-existent goods or services. To counteract this, organizations must establish stringent invoice verification processes and conduct regular reconciliations of financial records to detect any irregularities promptly.
Ghost employees represent another facet of fraud within the B/AR/CR process. In this scenario, fraudulent individuals are added to the payroll, and their salaries are collected by the perpetrator. To combat this, meticulous reviews of employee rosters and periodic audits are imperative to identify any discrepancies and prevent the misappropriation of funds.
Unauthorized disbursements present yet another avenue for fraud, involving the misappropriation of funds without proper approval. Establishing robust controls, such as dual authorization for disbursements, is crucial in mitigating the risk associated with unauthorized fund transfers. These preventive measures collectively contribute to fortifying the B/AR/CR process against fraudulent activities, safeguarding the financial integrity of the organization.