Off-Book Scheme
Definition
Any fraud in which transactions are never entered into the accounting records. Off-book schemes are the hardest to detect by accounting review because there is no entry to question. Skimming is the primary off-book cash scheme.
- Defining trait
- Transaction never recorded in accounting records
- Common example
- Skimming of cash before entry
- Detection difficulty
- No document trail to reconcile against
Common questions
Why are off-book schemes harder to catch than on-book fraud?+
Standard audit procedures compare recorded transactions against source documents, but an off-book scheme leaves no entry at all, so there is nothing on the books to flag as inconsistent or missing.
What detection methods work when there is no record to review?+
Investigators rely on indirect methods: comparing physical inventory or cash counts against expected totals, net-worth analysis, tips and complaints, and surveillance of the point where cash or goods first enter the process.
Related terms
- Cash Larceny
- Theft of cash already recorded in an organisation’s books. A shortage can appear when the recorded balance is compared with actual cash...
- Deposit Verification
- Audit procedure that traces cash receipts from the point of collection through to the bank deposit, confirming that the amounts recorded match...
- Register Reconciliation
- The process of comparing point-of-sale transaction records against physical cash drawer counts for the same period. Persistent shortages on specific shifts, registers,...
- Skimming
- Diversion of organisational cash receipts before they are recorded. Because the ledger may omit the transaction, investigators may compare independent sales, customer,...
- Surprise Cash Count
- An unannounced physical count of cash on hand at a specific location, compared against the accounting balance at the same moment. Persistently...