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Article
Publication date: 8 May 2018

Cenap Ilter

The paper aims to explore the present cheque clearance system in the USA and its possible misuses in the practical sense. Cheque kiting has been a way of creating…

Abstract

Purpose

The paper aims to explore the present cheque clearance system in the USA and its possible misuses in the practical sense. Cheque kiting has been a way of creating fictitious cash balances on the balance sheet, which is a fraud. This practice can be prevented by a different accounting treatment.

Design/methodology/approach

The paper compares the cheque clearance system in the USA with the author’s own experiences from Turkey. It purports the riskiness of the present cheque clearance system on the financial statements and suggests a practical accounting application to prevent possible financial statement misrepresentations.

Findings

The paper explores that if the present accounting treatment is changed both for the banks and the businesses, the possibility of cheque kiting and misrepresentation of cash balances on the balance sheet will end. Basically, cash is the amount that can be used by the customer, the rest is not cash, it is “cheques in collection” and it should be treated as an account receivable until it is collected.

Practical implications

Financial statements are vital for the business world. Based on these statements, banks lend money, governments collect taxes and people buy and sell stocks. They need to be presented fairly. The present accounting application on cheque clearance is not transparent enough in the USA, and this might lead to misrepresentation of financial statements. The paper suggests a practical solution to this problem. By changing the accounting treatment, the companies will only show cash in their cash accounts and not the cheques in the collection process.

Social implications

Fair treatment is the motto for any situation we face in our daily lives. One may be a poor or rich person but the treatment should be fair unless he/she is a fraudster. A rich person’s cheque is deposited in his/her bank account the next business day, and a poor person’s cheque might take days to be credited. This is not a fair treatment. The paper suggests that there must be a one-way accounting treatment, regardless of the depositor’s financial situation.

Originality/value

This paper has been prepared based on the author’s past business experience in Turkey and his study of the US cheque clearance system, comparing the two. It reflects the real-world examples of cheque kiting and its negative consequences in the USA and proposes a solution.

Details

Journal of Financial Crime, vol. 25 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 9 May 2008

Jonathan Fisher

The purpose of this paper is to consider the increased exposure to cyber crime which would result if one‐day cheque clearance were introduced in the UK.

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1164

Abstract

Purpose

The purpose of this paper is to consider the increased exposure to cyber crime which would result if one‐day cheque clearance were introduced in the UK.

Design/methodology/approach

This paper undertakes a comparative analysis of the UK and US cheque‐clearance systems, examines the enhanced vulnerability to fraud occasioned by a one‐day cheque clearance system and considers the resulting evidential difficulties encountered in US cheque fraud prosecutions. The paper then anticipates the UK experience and examines recent cyber‐crime cases in the UK. Finally the paper explores the possibility of biometric fingerprint authorisation as a prevention strategy.

Findings

The introduction of one‐day cheque clearance in the USA heralded an increase in cyber‐crime banking fraud and a reduction of the ability of the prosecuting authorities to bring cases to court because of the paucity of documentary evidence. The same pattern of activity would be likely to occur if one‐day cheque clearance were to be introduced in the UK. Banks should lobby for the replacement of cheque banking with biometric fingerprint authorisation of electronic banking transactions as the best way forward.

Practical implications

This paper indicates the most pragmatic way forward for banks targeted by this type of cyber‐crime and warns the legal profession of the evidential difficulties in US prosecutions.

Originality/value

This paper is of value to legal practitioners, academics, students and financial market professionals with interests in banking, fraud, and cyber‐crime.

Details

Journal of Financial Crime, vol. 15 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 April 1996

A.A. Al‐Melhem

The process of drawing cheques instead of cash is spreading, as a consequence of the expansion of banking operations, multiplicity of civil and commercial transactions and…

Abstract

The process of drawing cheques instead of cash is spreading, as a consequence of the expansion of banking operations, multiplicity of civil and commercial transactions and the simplicity of such drawing. A cheque is considered an instrument of payment, honoured instantly on demand. Thus a cheque may not be drawn for obtaining credit, and accepting a cheque by a creditor, as a form of payment, docs not discharge a debtor's obligation, unless the cheque value is paid by the drawee.

Details

Journal of Financial Crime, vol. 4 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 January 1991

Vic Penn

A summary of the Retail EFTPoS 90 conference is given. Theconference highlighted many developments over the past 12 months in theprogress of EFTPoS UK, and was…

Abstract

A summary of the Retail EFTPoS 90 conference is given. The conference highlighted many developments over the past 12 months in the progress of EFTPoS UK, and was enthusiastic about its future as a leading payment method system for the country′s retailers. News of other payments was also discussed, including a futuristic look at the smart card on the one hand and an overview of how retailers would benefit from the dismantling of the credit card anti‐competitive agreements on the other. Balancing the discussion about plastic payments, a contribution from Transax Financial Services, the UK′s largest cheque guarantee company, drew attention to the continuing presence of the cheque (still Britain′s second most preferred method of payment after cash) and highlighted the increasing requirement for retailers to be able to accept cheques without the risk of fraud.

Details

International Journal of Retail & Distribution Management, vol. 19 no. 1
Type: Research Article
ISSN: 0959-0552

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Article
Publication date: 1 June 1994

Nejdet Delener and Herbert Katzenstein

Explores the socioeconomic and demographic characteristics of Asian andHispanic credit card holders. Outlines a conceptualization of therelationships between alternative…

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2109

Abstract

Explores the socioeconomic and demographic characteristics of Asian and Hispanic credit card holders. Outlines a conceptualization of the relationships between alternative payment systems and various demographic and behavioural variables, which may serve as a preliminary theoretical framework for analyses of payment systems. Discusses the implications and their importance to marketers.

Details

International Journal of Bank Marketing, vol. 12 no. 4
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 1 February 1996

Michael S. Kim

The risk of cheque fraud is serious for companies that maintain bank accounts with a high volume of chequing activity. Sophisticated criminals could create convincing…

Abstract

The risk of cheque fraud is serious for companies that maintain bank accounts with a high volume of chequing activity. Sophisticated criminals could create convincing replicas of a company's cheques, or steal blank cheques from the company and forge the necessary signatures. In some cases, employees entrusted with clearing accounts payables embezzle company funds by writing cheques to dummy payees and cashing the cheques with false identifications. By the time the fraud is discovered, the criminals and the money are usually long gone, and the bank and the company are left to argue over who should bear the loss.

Details

Journal of Financial Crime, vol. 3 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 March 1999

K.H. Spencer Pickett

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of…

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29306

Abstract

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of exploring the main themes ‐ a discussion between Bill and Jack on tour in the islands ‐ forms the debate. Explores the concepts of control, necessary procedures, fraud and corruption, supporting systems, creativity and chaos, and building a corporate control facility.

Details

Management Decision, vol. 37 no. 2
Type: Research Article
ISSN: 0025-1747

Keywords

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Article
Publication date: 1 April 1990

Cengiz Erol, Erdener Kaynak and El‐Bdour Radi

In recent years financial institutions, marketingresearchers and public policy makers haverecognised that behavioural analysis is vital forunderstanding bank customers…

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1209

Abstract

In recent years financial institutions, marketing researchers and public policy makers have recognised that behavioural analysis is vital for understanding bank customers. Most studies so far have focused on understanding the behaviour of customers of commercial banks in developed economies. Very little research has been undertaken concerning bank customers′ attitudes and behavioural characteristics in developing countries. The purpose of this study is to understand customers′ attitudes, beliefs and perceptions about the services offered by conventional and Islamic banks in Jordan. The information presented here will provide Jordanian bank executives and public policy makers, and other developing country executives, with insights into the kind of services bank customers find most appropriate to their banking needs.

Details

International Journal of Bank Marketing, vol. 8 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

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Article
Publication date: 1 June 1998

K.H. Spencer Pickett

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of…

Downloads
24822

Abstract

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of exploring the main themes ‐ a discussion between Bill and Jack on tour in the islands ‐ forms the debate. Explores the concepts of control, necessary procedures, fraud and corruption, supporting systems, creativity and chaos, and building a corporate control facility.

Details

Managerial Auditing Journal, vol. 13 no. 4/5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 February 2004

Anthony R. Bowrin

The purpose of this paper is twofold. First, it describes the nature of internal controls (IC) in Christian and Hindu religious organizations (ROs) in Trinidad and Tobago…

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2597

Abstract

The purpose of this paper is twofold. First, it describes the nature of internal controls (IC) in Christian and Hindu religious organizations (ROs) in Trinidad and Tobago. Second, the paper provides an assessment of the relative comprehensiveness of IC among the ROs examined and offers tentative explanations for the findings. Most of the information used in the paper was collected by conducting structured interviews with the chief financial officer(s) of each RO. This information was supplemented by published studies. The findings indicate that the ROs as a group have inadequate and patchy IC systems. Conversely, all the ROs examined had implemented many of the basic foundational elements of an effective IC system. This suggests that they could significantly improve the quality of their IC systems by instituting some fairly minor and cheap practices. The implications of these findings for administrators and researchers of ROs are discussed.

Details

Accounting, Auditing & Accountability Journal, vol. 17 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

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