Fraud comes in many forms but can be broken down into three categories: misappropriation of assets, corruption, and fraud in financial statements. Asset misappropriation, although less costly, accounted for 90% of all the fraud cases studied.
Fremont, CA: Employee fraud is a major problem faced by organisations of all types, sizes, locations and industries. While we would all like to believe that our employees are loyal and work for the benefit of the organisation (and most likely are), there are still many reasons why your employees may commit fraud and a number of ways in which they could do so.
Types of fraud in business
• Fraud comes in many forms but can be broken down into three categories: misappropriation of assets, corruption, and fraud in financial statements. Asset misappropriation, although less costly, accounted for 90% of all the fraud cases studied. These are schemes in which an employee steals or exploits the resources of his organization. Examples of misappropriation of assets include stealing cash before or after recording, making false claims for reimbursement of expenses, and/or taking non-cash assets of the organisation.
• Financial Statement fraud accounted for less than five per cent of the cases, but resulted in the most median loss. These are schemes that involve omitting or intentionally missing information in the company's financial reports. This may be in the form of fictitious revenues, hidden liabilities or inflated assets.
• Corruption fell in the middle and accounted for less than one third of the cases. Corruption schemes occur when employees use their influence in business transactions to their advantage while violating their duty to the employer. Examples of corruption include bribery, extortion, and conflict of interest.
• You might be impressed by the employees who haven't missed a working day in years. While they may seem like loyal employees, it could be a sign that these employees have something to hide and are worried that someone will detect their fraud if they have been out of office for some time.It is also a good idea to turn employees into different jobs within a company. This may also reveal fraudulent activity, since it allows a second employee to review the activities of the former.
Also See: Business Management Review