5 Types Of Cash Larceny, And How To Prevent Them

Cash larceny is the theft of cash which has already been accounted for in the books.

In this day and age most companies keep detailed paper trails so such fraud is generally one of the easiest both to detect and prevent.

cash-larceny

Here are the 5 main types of cash larceny

  • Stealing money from the till
  • Writing IOUs against personal cheques
  • Reversing cash transactions
  • Removing auditing tape
  • Altering cash counts

Here they are again, with more detail and the means to detect/prevent them –

STEALING MONEY FROM THE TILL

Till, or register, theft has to be the most common form of cash larceny simply because it involves direct access to cash receipts.

When cash is stolen from the register, there is already a record of the transaction on the audit roll.

Till theft leads to an imbalance between the cash in the drawer and the transaction totals on the audit roll.

In order to detect till theft it is necessary to reconcile both cash balances, and track individual cashiers, to ensure there are no employees who consistently have less cash in their drawer than the audit roll dictates that they should have.

Fraud prevention in this instance is through informing employees that reconciliation takes place, assigning passwords to each cashier, and restricting the amount of cash present in the till at any time by utilising regular cash pickups.

WRITING IOUs AGAINSTS PERSONAL CHECKS

This method of cash larceny is less effective than stealing directly from the till because it requires the fraudster to cover the balance with a personal cheque in order to allow the till balance to reconcile.

Of course, the fraudster is no better off after a while as the cheque will eventually be cashed, thereby counteracting the cash that they have already taken.

They also run the risk of having the cheque being spotted during the reconciliation process.

The best means of preventing this type of fraud is for companies to make it a matter of policy that employees cannot cash cheques, or pay for goods and services at work with them, under any circumstances.

This would make it extremely easy to detect when an employee cheque is subsequently found.

REVERSING CASH TRANSACTIONS

Reversing transactions is a means for fraudsters to cover their tracks after committing till theft. By entering or recording fraudulent returns or voids on the register, they then decrease the amount of cash that will be recorded as being in the register.

This in turn gives them the opportunity to steal the difference.

The best prevention of this type of fraud is to have some sort of system in place that requires all cashiers to obtain management permission and authorisation before being able to void off any transactions.

REMOVING AUDITING TAPE

Removal of the auditing tape would allow the fraudster to take cash given as payment instead of placing it within the till.

If an audit roll shows large gaps then this would be one sign that such a crime is taking place.

However, the fraudster may be able to temporarily jam the roll, thereby being able to ‘lose’ a transaction only very occassionally.

A good means of preventing this fraud is to install some sort of surveillance system which can be used to monitor cashier’s actions.

ALTERING CASH COUNTS

One way that a dishonest cashier can steal, and cover their tracks, is by also being involved within the reconciliation process.

This would give them the opportunity to reconcile their own till to whatever figure they wish which would allow them to go on stealing undetected.

The easiest solution to this issue would be to separate staff duties such that no cashier is ever allowed to reconcile either their own till or anyone else’s.

Hopefully, the above tips give a rough idea of how cash larceny is perpetrated, how it can be spotted and also how it can be prevented.

Of course a lot of it depends on having trustworthy members of management who may otherwise become embroiled in such fraud or schemes themselves.

If you need to rely on others to safeguard your tills then consider undertaking detailed background checks on them to ensure they are of good and honest character themselves.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Comments

  1. Thankyou for such a detailed and thorough article.

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