One reason employees might be hesitant to use PO boxes in shell company schemes is that some businesses are specially vary of sending checks to vendors that have street addresses only.

The statement is incorrect because it reverses the common red flag associated with shell company schemes. Businesses are generally more, not less, wary of sending payments to vendors that use a Post Office (PO) box instead of a physical street address. The use of a PO box can indicate that the vendor lacks a legitimate physical presence, which is a primary characteristic of a shell company created for fraudulent purposes. Therefore, an employee perpetrating a shell company scheme might be hesitant to use a PO box because it is more likely to attract scrutiny and be flagged for review by the accounts payable department.

The statement is "True" is incorrect because the premise that businesses are "specially wary of sending checks to vendors that have street addresses only" is factually wrong in the context of fraud detection. Standard internal controls and fraud examination procedures identify PO boxes, mail drops, and addresses that match employee residences as warning signs, while a legitimate physical street address is generally considered an indicator of a bona fide business.

1. Association of Certified Fraud Examiners. (2023). Fraud Examiners Manual, International Edition. In the section on Billing Schemes, under the subsection "Detecting Shell Company Schemes," the manual explicitly lists "Vendor's address is a post office box" as a common red flag. This indicates that organizations are trained to be suspicious of PO boxes, not street addresses. (Section 2.318).

2. Singleton, T. W., & Singleton, A. J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). John Wiley & Sons. This textbook, widely used in university forensic accounting courses, identifies red flags for shell company schemes. In Chapter 7, "Billing Schemes and Payroll Fraud," it notes that analytical tests for shell companies include searching the vendor master file for vendors with PO box addresses or addresses that match employee addresses. This reinforces that PO boxes, not physical street addresses, are the source of suspicion. (Chapter 7, pp. 155-157).

3. Kranacher, M. J., Riley, R., & Wells, J. T. (2011). Forensic Accounting and Fraud Examination. John Wiley & Sons. In its discussion of billing schemes, this academic text explains that shell companies often use a PO box or the perpetrator's home address. It further details that a proactive audit test is to "identify vendors with P.O. box addresses" as a method for uncovering such schemes, confirming that this is a recognized indicator of risk. (Chapter 9, "Billing and Payroll Schemes").