Page 254 - ACFE Fraud Reports 2009_2020

how occupational Fraud is Committed

Previous ACFE research has identified three primary cat-
egories of occupational fraud used by individuals to de- Based on previous ACFE
fraud their employers. Asset misappropriations are those research we have broken down
schemes in which the perpetrator steals or misuses an the schemes reported to us
organization’s resources. These frauds include schemes
such as skimming cash receipts, falsifying expense re- into three primary categories:
ports and forging company checks. asset misappropriation,
corruption, and financial
Corruption schemes involve the employee’s use of his or statement fraud.
her influence in business transactions in a way that vio-
lates his or her duty to the employer for the purpose of
obtaining a benefit for him- or herself or someone else.
Examples of corruption schemes include bribery, extor-
tion and a conflict of interest.

Financial statement fraud schemes are those involving
the intentional misstatement or omission of material in-
formation in the organization’s financial reports. Common
methods of fraudulent financial statement manipulation
include recording fictitious revenues, concealing liabili-
ties or expenses and artificially inflating reported assets.

As indicated in the following charts, asset misappropriations Financial statement fraud is the most
are by far both the most frequent and the least costly form costly form of occupational fraud, causing
of occupational fraud. On the other end of the spectrum are a median loss of more than $4 million.
cases involving financial statement fraud. These schemes
were present in less than 5% of the cases reported to us,
but caused a median loss of more than $4 million. Corrup-
tion schemes fell in the middle category in both respects,
occurring in just under one-third of all cases involved in our
study and causing a median loss of $250,000.

10 | 2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE