Pass-through scheme
Definition
A billing scheme in which a legitimate supplier is used as a conduit. The fraudster, who controls or colludes with the supplier, inflates prices or adds fictitious line items. The victim organisation pays the inflated invoice, and the excess flows back to the fraudster.
Related terms
- Benford's Law
- An empirical regularity in naturally occurring numerical datasets: the leading digit follows a logarithmic distribution, with 1 appearing about 30% of the...
- Duplicate-payment analysis
- A data analytics test that identifies invoice payments made more than once for the same obligation, by matching on vendor, invoice number,...
- Shell company
- A legal entity with no genuine business operations, created to receive fraudulent payments. In vendor fraud, the fraudster controls the shell and...
- Three-way match
- An accounts-payable control that requires a supplier invoice to match an authorised purchase order and a goods receipt note before payment is...
- Vendor master file
- The master record of approved suppliers in the accounts-payable system, containing each vendor's name, address, tax identification, and payment bank account. Unauthorised...
Explained in
- Billing and Vendor Fraud SchemesA billing scheme in which a legitimate supplier is used as a conduit. The fraudster, who controls or colludes with the supplier, inflates prices or adds fictit...