Cash advances are funds disbursed to employees in anticipation of legitimate business expenses. This type of transaction requires rigorous oversight because it creates an opportunity for misappropriation. Examiners must scrutinize cash advance records to ensure that every advance is subsequently justified with proper documentation, such as detailed expense reports and original receipts. Failure to reconcile an advance in a timely manner could indicate that the funds were used for personal reasons or that the employee has received an inappropriate payment. Therefore, examining cash advances is a critical procedure for detecting and preventing employee fraud.

A. Payable cash: This is not a standard accounting term. It is too vague and does not specifically refer to a high-risk category of payments made to employees.
C. Counterfeit checks: This refers to a fraudulent instrument used to extract funds, not a category of internal company transactions that are reviewed for proper documentation and appropriateness.
D. Payable checks: This term is too general. While all issued checks are subject to review, cash advances represent a specific and higher-risk area concerning payments to employees.

1. Association of Certified Fraud Examiners (ACFE). Fraud Examiners Manual, 2023 International Edition. Section 2, "Asset Misappropriation: Cash Schemes," subsection "Expense Reimbursement Schemes." The manual details how expense reimbursement schemes are perpetrated, often originating from cash advances. It emphasizes the importance of tracking advances to ensure they are cleared with legitimate expense reports, stating that outstanding advances should be investigated.

2. Singleton, T. W., & Singleton, A. J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). John Wiley & Sons. Chapter 6, "Cash Larceny and Skimming," discusses controls over cash disbursements. The text explains that advances to employees must be properly controlled and accounted for through expense reports to prevent them from becoming fraudulent disbursements. (See specifically discussion on controls for cash disbursements).

3. Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2016). Fraud Examination (5th ed.). Cengage Learning. Chapter 8, "Cash Misappropriation Schemes," explains that a common red flag for expense reimbursement fraud is outstanding cash advances that are not cleared in a timely manner, highlighting the need for examiners to review these specific transactions.