TheInternal Controlstopic in the APS Certification Program emphasizes fraud prevention, including check fraud, which is a significant risk in AP due to the handling of payments. Check fraud can occur throughcheck alteration(modifying payee or amount),invalid payments(payments to fraudulent vendors or for unauthorized transactions), andstolen issued checks(checks intercepted and cashed fraudulently). All three are recognized methods of check fraud.
Item I (Check alteration): Altering a check’s payee, amount, or date is a common fraud method, often mitigated by controls like positive pay. This is a valid way.
Item II (Invalid payments): Payments to fictitious vendors or for unauthorized purposes (e.g., duplicate invoices) constitute fraud, often enabled by weak vendor validation. This is a valid way.
Item III (Stolen issued checks): Stealing issued checks (e.g., from mail) and cashing them fraudulently is a well-documented fraud risk, mitigated by secure check handling. This is a valid way.
Option A (I, II, and III): Correct, as all three are ways organizations suffer from check fraud.
Option B (II and III only): Incorrect, as Item I is also a valid method.
Option C (I and III only): Incorrect, as Item II is also a valid method.
Option D (I and II only): Incorrect, as Item III is also a valid method.
Reference to IOFM APS Documents: The APS e-textbook underInternal Controlslists “check alteration, invalid payments to fraudulent vendors, and stolen checks” as common check fraud methods. It emphasizes controls like positive pay and secure check storage to mitigate these risks. The training video discusses check fraud scenarios, citing all three methods as prevalent in AP processes.
