What fraud scheme involves an employee with signature authority writing fraudulent checks for personal benefit?

What fraud scheme involves an employee with signature authority writing fraudulent checks for personal benefit?

• A. A false billing scheme
• B. A mischaracterized expense scheme
• C. An authorized maker scheme
• D. A forged maker scheme

Answer: (C)

An employee who has signature authority and uses that power to issue checks for their own benefit is exploiting their role as a signer. This is an authorized maker scheme—the signer (the maker) is legitimately authorized to create checks, but uses that authority to commit fraud. It’s different from a forged maker scheme, where someone forges the maker’s signature; here the signer’s signature is genuine. The other options describe fraud that involves creating fake invoices or misclassifying expenses, not abusing the check-writing authority. Strengthen controls by separating check preparation from signing, requiring dual approvals, and regularly reconciling bank activity to catch unauthorized payments.

An employee who has signature authority and uses that power to issue checks for their own benefit is exploiting their role as a signer. This is an authorized maker scheme—the signer (the maker) is legitimately authorized to create checks, but uses that authority to commit fraud. It’s different from a forged maker scheme, where someone forges the maker’s signature; here the signer’s signature is genuine. The other options describe fraud that involves creating fake invoices or misclassifying expenses, not abusing the check-writing authority. Strengthen controls by separating check preparation from signing, requiring dual approvals, and regularly reconciling bank activity to catch unauthorized payments.