Fraudulent Disbursement
Definition
A scheme in which the perpetrator manipulates the organisation's outbound payment process to divert money to themselves or an accomplice. The main sub-types are billing schemes, payroll fraud, expense reimbursement fraud, and register disbursements.
- Category
- Asset misappropriation sub-type
- Main forms
- Billing, payroll, expense reimbursement, register disbursement schemes
- Mechanism
- Manipulates the outbound payment process itself
- Detection focus
- Vendor master file, approval trails, payee matching
Common questions
How does a billing scheme fraudulent disbursement typically work?+
An employee sets up a shell company or a fictitious vendor and submits invoices for goods or services never delivered, then approves or routes the payment to themselves or an accomplice. Auditors look for vendors sharing an address or bank account with an employee.
What distinguishes fraudulent disbursement from simple cash skimming?+
Skimming removes cash before it is ever recorded in the books, leaving no transaction trail. Fraudulent disbursement generates a recorded, seemingly legitimate outbound payment, so the trail exists but is falsified, which makes it detectable through document and vendor analysis rather than cash counts.
Related terms
- Cash Larceny
- Taking cash that has already been recorded in the accounting system. The record exists, so the theft creates a provable discrepancy between...
- Ghost Employee
- A fictitious or terminated worker whose record remains active on the payroll master file. Wages are disbursed under that record and diverted...
- Lapping
- A scheme to conceal the theft of cash from customer receipts by applying a later customer's payment to the earlier customer's account....
- Segregation of Duties
- The principle that the authorisation, custody, and recording of any transaction should be performed by different people. Its absence is the single...
- Skimming
- An off-book cash theft: revenue is stolen before it enters the accounting system, so no entry is ever made. Skimming is harder...