There are many different types of fraud, and as a business owner or manager understanding them and the manner in which they are committed is paramount to avoiding victimization. The three categories of occupational fraud are asset misappropriation, corruption and fraudulent statements. This can take many forms, such as business inventory, supplies, intellectual property such as product designs or customer information. Today, we analyze asset misappropriation.
The vast majority of occupational fraud cases come in the form of asset misappropriation. This is a broad category involving either theft of company assets or the fraudulent disbursement of cash.
A few of the more common forms of asset misappropriation include skimming, billing, expense reimbursements and non-cash misappropriations.
Skimming occurs when cash is stolen before it is logged into the company’s records. A common example of this is when an employee accepts payment from a customer and pockets the money instead of recording it as a sale.
• Billing fraud
Billing fraud is when a person submits invoices to the company for fraudulent purchases, inflates the actual amounts due from the company or bills for personal expenditures. Often, employees bill their employers for nonexistent services or supplies using a shell company, or simply submit invoices for their own personal purchases.
• Expense reimbursement fraud
Expense reimbursement fraud is when an employee claims reimbursement from an employer for nonexistent expenses, like travel and meals that never occurred.
• Non-cash misappropriations
Non-cash misappropriations are when an employee steals any assets other than cash from a company. This can take many forms, such as business inventory, supplies or customer information.