Grey, a controller for a small company, took money from company deposits and concealed the theft by making false accounting entries. This scheme is best classified as which type?

Grey, a controller for a small company, took money from company deposits and concealed the theft by making false accounting entries. This scheme is best classified as which type?

• A. Skimming scheme
• B. Illegal gratuities scheme
• C. Fraudulent financial statement scheme
• D. Cash larceny scheme

Answer: (D)

Cash larceny involves stealing cash that has already been received and recorded, and then hiding the loss by manipulating the accounting records. In this case, the controller took money from company deposits and used false accounting entries to conceal the theft. The cash had already entered the books, so the theft isn’t about taking cash before it’s recorded (which would be skimming). It also doesn’t involve misrepresenting financial statements or accepting bribes, which are different fraudulent schemes. The key idea is that the theft is of cash after it has been recorded, with the cover-up relying on falsified entries.

Cash larceny involves stealing cash that has already been received and recorded, and then hiding the loss by manipulating the accounting records. In this case, the controller took money from company deposits and used false accounting entries to conceal the theft. The cash had already entered the books, so the theft isn’t about taking cash before it’s recorded (which would be skimming). It also doesn’t involve misrepresenting financial statements or accepting bribes, which are different fraudulent schemes. The key idea is that the theft is of cash after it has been recorded, with the cover-up relying on falsified entries.