What does the term "cash larceny" refer to in the context of fraud schemes?

In the context of fraud schemes, "cash larceny" specifically refers to the theft of cash after it has been recorded in the accounting system. This means that the cash is stolen from the organization or from cash receipts that are already documented in the financial records.

The importance of this definition lies in the timing of the theft: since the cash has already been recorded, it presents a significant challenge for detection. The perpetrator may go through various means, such as manipulating the records or employing other deceptive practices, to conceal the theft from internal controls and audits. This scenario underscores the risk of fraud within an organization, where cash is assumed to be accounted for, yet is missing due to the illicit actions of an employee or an insider.

Understanding this concept is crucial for fraud examiners, as it highlights how internal controls can sometimes fail to catch fraud that occurs after cash is properly recorded, in contrast to other types of theft that occur before a transaction is documented.