Page 258 - ACFE Fraud Reports 2009_2020

how occupational Fraud is Committed

Asset Misappropriation sub-schemes
With nearly 90% of occupational frauds involving some form of asset misappropriation, it is instructional to further de-
lineate the methods used by employees to embezzle organizational assets. We divided asset misappropriation schemes
into nine sub-categories, as illustrated in the table on page 15. The first eight sub-categories represent schemes target-
ing cash; these frauds account for approximately 85% of all asset misappropriations.

Two of the sub-schemes — skimming and cash larceny — involve pilfering incoming cash receipts, such as sales revenues
and accounts receivable collections. The next five sub-categories — billing, expense reimbursement, check tampering,
payroll and fraudulent register disbursement schemes — involve fraudulent disbursements of cash. The eighth form of
cash misappropriation targets cash the organization has on hand, such as petty cash funds or cash in a vault. The final
sub-category of asset misappropriations covers the theft or misuse of non-cash assets, including inventory, supplies, fixed
assets, investments, intellectual property and proprietary information. The table on page 15 provides the frequency and
median loss associated with each asset misappropriation sub-category.

Duration of Fraud schemes
In addition to examining the monetary cost of the fraud cases reported to us, we analyzed the length of time these schemes
lasted before being detected. The median duration — the time period from when the fraud first occurred to when it was
discovered — for all cases in our study was 18 months. Not surprisingly, cases involving financial statement fraud — the
most costly form of fraud — lasted the longest, with a median duration of 27 months. Fraudulent register disbursements,
on the other hand, were not only the least costly form of fraud in our study, but also tended to be detected the soonest.

Median duration of Fraud based on Scheme Type

Financial Statement Fraud 27
Check Tampering 24
Expense Reimbursements 24
Scheme Type Cash on Hand 18 24
Payroll
24
Billing
Corruption
18
Skimming
Larceny 18
18
Non-Cash 15
Register Disbursement 12
0 5 10 15 20 25 30
Median Months to Detection

14 | 2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE