Different Types of Fraud: Stealing, Lying, Cheating

Stealing is the most common type of fraud and includes asset misappropriation, theft of money, inventory, trademarks, or company secrets and processes.

  • A bartender services his friends a round of drinks. Rather than entering the sale into the cash register, the bartender keeps the money for himself.
  • An accounts receivable clerk receives a $1,000 payment from Customer A for a payment on account. The clerk deposits the money into her personal account and writes-off Customer A’s account receivable as a bad debt.

Lying includes financial statement fraud or dishonest behavior like not recording time or expenses accurately.

  • An employee creates a fake vendor to bill his employer for fictitious services.
  • Employee A arrives to work 30 minutes before employee B. Each day employee A punches both his timecard and employee B’s timecard, giving employee B unearned paid time.

Cheating includes corruption. This would include making deals with vendors or customers where the employee benefits by receiving a kick-back when a product is purchased or sold.

  • An employee makes a deal with Vendor A that if they stock his product, the employee gets “free” product for their personal use.

Business fraud by the numbers

is median loss caused by occupational fraud.
is the amount lost in 23% of cases.
is the median loss caused by employees of ten or more years.
of fraudsters are first-time offenders with clean employment histories.
Association of Certified Fraud Examiners (ACFE) - “2016 Report to the Nations on Occupational Fraud and Abuse” ACFE Website

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