Page 654 - ACFE Fraud Reports 2009_2020

GLOSSARY OF

TERMINOLOGY

Asset misappropriation: A scheme in which an employee Financial statement fraud: A scheme in which an employee
steals or misuses the employing organization’s resourc- intentionally causes a misstatement or omission of material
es (e.g., theft of company cash, false billing schemes, or information in the organization’s financial reports (e.g., re-
inflated expense reports) cording fictitious revenues, understating reported expens-
es, or artificially inflating reported assets)
Billing scheme: A fraudulent disbursement scheme in which
a person causes his or her employer to issue a payment by Hotline: A mechanism to report fraud or other violations,
submitting invoices for fictitious goods or services, inflated whether managed internally or by an external party
invoices, or invoices for personal purchases (e.g., employee
creates a shell company and bills employer for services not Management review: The process of management review-
actually rendered; employee purchases personal items and ing organizational controls, processes, accounts, or transac-
submits an invoice to employer for payment) tions for adherence to company policies and expectations

Cash larceny: A scheme in which an incoming payment is Noncash misappropriations: Any scheme in which an
stolen from an organization after it has been recorded on employee steals or misuses noncash assets of the victim
the organization’s books and records (e.g., employee steals organization (e.g., employee steals inventory from a ware-
cash and checks from daily receipts before they can be house or storeroom; employee steals or misuses confiden-
deposited in the bank) tial customer information)

Cash-on-hand misappropriations: A scheme in which the Occupational fraud: The use of one’s occupation for
perpetrator misappropriates cash kept on hand at the victim personal enrichment through the deliberate misuse or
organization’s premises (e.g., employee steals cash from a misapplication of the employing organization’s resources or
company vault) assets

Check or payment tampering scheme : A fraudulent Payroll scheme: A fraudulent disbursement scheme in
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disbursement scheme in which a person steals his or her which an employee causes his or her employer to issue
employer’s funds by intercepting, forging, or altering a a payment by making false claims for compensation (e.g.,
check or electronic payment drawn on one of the organiza- employee claims overtime for hours not worked; employee
tion’s bank accounts (e.g., employee steals blank company adds ghost employees to the payroll)
checks and makes them out to himself or herself or an
accomplice; employee re-routes an outgoing electronic Primary perpetrator: The person who worked for the victim
payment to a vendor to be deposited into his or her own organization and who was reasonably confirmed as the
bank account) primary culprit in the case
Corruption: A scheme in which an employee misuses his or Register disbursements scheme: A fraudulent disburse-
her influence in a business transaction in a way that violates ment scheme in which an employee makes false entries on
his or her duty to the employer in order to gain a direct or a cash register to conceal the fraudulent removal of cash
indirect benefit (e.g., schemes involving bribery or conflicts (e.g., employee fraudulently voids a sale on his or her cash
of interest) register and steals the cash)

Employee support programs: Programs that provide Skimming: A scheme in which an incoming payment is
support and assistance to employees dealing with personal stolen from an organization before it is recorded on the
issues or challenges, such as counseling services for drug, organization’s books and records (e.g., employee accepts
family, or financial problems payment from a customer but does not record the sale and
instead pockets the money)
Expense reimbursements scheme: A fraudulent disburse-
ment scheme in which an employee makes a claim for reim- 8 In previous reports, this category was referred to simply as check tam-
bursement of fictitious or inflated business expenses (e.g., pering. However, to better reflect the increasing shift toward electronic
employee files fraudulent expense report, claiming personal payment methods, we have changed the category title to check and
travel, nonexistent meals) payment tampering.

78 Glossary of Terminology Report to the Nations