Secret bank accounts lead to havoc. Substantial losses can occur when unauthorized
Fraud
Fraud occurs when assets are stolen or financial statements are intentionally misstated. The Association of Certified Fraud Examiners (ACFE) estimates that companies, on average, lose 5% of revenues to fraud annually. The ACFE categorizes fraud in three categories: (1) asset misappropriation, (2) corruption, and (3) financial statement.
Asset Misappropriation
Asset misappropriation is a scheme whereby an employee steals. These schemes include the skimming of cash receipts, theft of physical assets, fictitious vendors, and tampering with checks.
This is the most common form of fraud but is usually the least costly.
Corruption
Corruption is the misuse of an employee's influence to derive personal benefit. An example is an employee's receipt of a bribe from a vendor.
While corruption is less common than asset misappropriation, it is usually more costly.
Financial Statement
Fraud also occurs when companies intentionally misstate their financial statements (sometimes called "cooking the books"). In doing so, stock prices might increase and owners and management can sell their stock for fraudulent gains.
This the least common fraud, but, on average, is the most costly.
Below are fraud-related articles to assist you in understanding theft schemes.
Misappropriation Articles
Thefts of Cash From Local Governments
Thefts of cash from local governments is common. How many times have
Collin Street Bakery Fraud: $16 Million
Sandy Jenkins, a controller, stole $16 million from the Collin Street Bakery.
Fictitious Vendor Fraud: How to Prevent It
Twenty-four percent of governmental frauds are billing schemes such as fictitious vendor
Expense Fraud: An Honest Theft
Honest people steal. Nice, innocent looking people take money that’s not theirs.
Rita Crundwell Story: Why Some Ranches Stink
Is it possible for one person to steal over $53 million from
Fake Bank Accounts and the Appalachian Trail
Some fraudsters funnel money into fake bank accounts. Today, I show you
Three Receipt Fraud Tests
Today I provide three receipt-fraud tests for auditors. The audit standards require
College Theft of Funds: Official Steals $4.1 Million
College theft happens more than we think. After all, aren’t these guardians tasked
Nonprofit Fraud: Selling Donated Goods
Nonprofit fraud is real. Hard to believe? Yes. But it happens. Sometimes
Cash Receipts Theft: Supervisor Steals
In this article, I discuss cash receipts theft and how you can
Receipt Fraud: Would Andy Griffith Steal?
Stealing Unaccrued Receivable Checks is Easy
Stealing Unaccrued Receivable Checks Some fraudsters steal unaccrued receivable checks and convert
Splitting Payments to Circumvent Approval Requirements
Some fraudsters split payments to circumvent approval requirements. In this article, I
How Employees Steal with Company Credit Cards
Some people wonder Is using a company credit card for personal use embezzlement?
Payroll Fraud: Easy Ways to Steal
Payroll fraud is quite common. Sometimes the theft occurs as a payroll
Stealing While Dying: A Motive for Fraud
Some fraudsters steal while dying. What’s their motive? Possibly to avoid leaving
Inflated Invoices: An Easy Way to Steal
Fraudsters can steal with inflated invoices. In the story below, you’ll see
How to Steal by Double Paying a Vendor
The Theft Fraudsters can steal by double paying a vendor. In this
Fraudsters Writing Checks to Themselves: How to Understand It and Prevent It
The Theft Fraudsters do write company checks to themselves. Today I tell
Converting Company Checks to Cash
The Theft: Converting Company Checks to Cash In a recent post, we
Theft of Capital Assets in Local Governments
Theft of Capital Assets In businesses, nonprofits, and governments, the theft of
Check-for-Cash Fraud: Easy Theft
The Theft: Check-for-Cash The check-for-cash fraud scheme is a simple yet effective
Ghost Employee Fraud: Payroll Theft
In this article I explain ghost employee fraud and what you can
Wire Transfer Fraud: Prevent It
The Theft: Wire Transfer Fraud In one of the simplest thefts I’ve
Skimming Cash Payments: Prevent It
Skimming cash payments is a common theft, especially if receipting controls are
The Dangers of a Trusted Bookkeeper
Many small businesses experience great harm because they do not understand the
Theft of Government Property: Stealing Tax Money
Theft of government property happens. Cash. Equipment. Vehicles. Inventory. You name it.
Altered Checks: A Fraud Scheme
Some fraudsters steal money with altered check payees. As a kid I
Corruption Articles
Nonprofit Bid-Rigging and Kickbacks
In this article, we look at a nonprofit bid rigging case. (Some
Bribery in Businesses: How to Lessen
The World Bank estimates that over $1 trillion in bribes are offered
Financial Statement Articles
Accounting Tricks Used to Inflate Earnings
Companies can inflate earnings easily with accounting tricks such as cookie jar
Related Party Transactions: Fraud
Related party transactions can be a means to fraudulent financial reporting. Yet,
