Page 494 - ACFE Fraud Reports 2009_2020

How Occupational

Fraud Is Committed

As part of our ongoing research into the methods used to occupational fraud: asset misappropriation, corruption,
commit fraud, the ACFE has developed the Occupational and financial statement fraud. Each of these categories
7
Fraud and Abuse Classification System, also known as is broken down into several subcategories.
the Fraud Tree. As reflected in the Fraud Tree graphic
shown in Figure 3, there are three primary categories of 7 For definitions of each of these scheme types, please see the Glossary of Terminology on
page 90.

The Evolution of the Fraud Tree

The Fraud Tree’s genesis was in the first ACFE Report to the Na- pational fraud schemes to help organizations understand their fraud
tion on Occupational Fraud and Abuse, published in 1996. While risks and develop targeted anti-fraud controls.
analyzing the cases reported to us during our inaugural study on The ACFE has made minor modifications to the Fraud Tree since its
occupational fraud, we noted several patterns in the ways occu- inception to improve its organizational structure and more closely
pational fraud is committed. By organizing the cases according to align it with the thousands of cases analyzed over our two decades
these patterns, we discovered that almost all occupational fraud of research. For example:
schemes fall into specific categories that target different functions • In 2012, we reorganized the schemes that target cash by
and operations within a business or government entity. Based on adding a category called Theft of Cash Receipts, placing Skim-
these categories, we created a full classification system of occu- ming and Cash Larceny as sub-categories of this new group,

10 REPORT TO THE NATIONS ON OCCUPATIONAL FRAUD AND ABUSE