Cash Larceny

Cash larceny is the theft of cash that has already been accounted for in the organization's books. It is a form of embezzlement limited to operations involving the original receipt of cash. Among the five most prevalent forms of cash larceny are: stealing from the register, writing personal checks to cover the theft of cash, reversing cash transactions, removing or altering the register tape, and altering the cash count.

  • Stealing cash from the register. This is the most common form of cash larceny.
  • Writing personal checks to cover the theft of cash. This practice ensures that the shortage is not readily detected by reconciliation. However, the employee has not accomplished very much. Either the employee's check will clear and the employee will have had the use of the pilfered amount for a day or two, or the check will bounce and the scheme will be discovered.
  • Reversing cash transactions. fraudsters cover up their register thefts using this technique. Creating fraudulent returns or voids reduces the amount of cash expected in the till at the end of the day. The fraudster steals the amounts fraudulently reported as voids and returns.
  • Removing or altering the register tape. The actual register tape can be removed or altered. If removed, sometimes a substitute can be used to replace the original.
  • Altering the cash count. Removing cash without replacing it is a form of fraud that is likely to be detected on the first attempt.                          
Risks Risks Risks
General Guidance

Infrequent bank deposits, allowing cash to accumulate.

Consistent shortages in cash on hand.

Consistent fluctuations in bank account balances.

Closing out cash drawer before end of shift.

Missing items due to physical theft.

Lack of regular physical inventories carried out by independent personnel.

No policy regarding identification, sale, and disposal of obsolete and surplus materials.

Segregate duties between ordering goods and receiving goods.

Segregate duties between receipt of inventory and issuing of materials.

James Madison University (JMU) offers guidance and has a basic receiving report that can easily be replicated

The U.S. Department of Defense (DOD) has a more complex material inspection and receiving report

DOD Fraud Red Flags and Indicators