Major types of fraud

How do you define fraud? Author Martha Maeda includes these descriptors: intentional; involving falsification of records; misrepresents the truth; and causes harm to its victims.

Here are some of fraud’s major forms, as identified by Maeda:

• Asset misappropriation (theft) and embezzlement: Approximately 90% of occupational fraud involves asset appropriation, in which employees take cash or property from a business and attempt to cover their tracks.

• Fraudulent disbursements: The most common type of asset appropriation scheme, which breaks down into four sub-categories: billing schemes, payroll schemes, check tampering, and abuse of expense accounts.

• Corruption: This occurs when an employee deliberately disobeys company policies and business regulations for personal gain.

• Financial Statement Fraud: This involves the manipulation of a company’s financial statements to misrepresent the company’s value, revenues, or liabilities to others.

This article is associated with Richard Kozlow’s review of Martha Maeda’s The Complete Guide to Spotting Accounting Fraud & Cover-Ups.

Click here to return to the review

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