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4 basic types of financial fraud

June 14, 2018 8:34 am

Fraud is everywhere, cover ups are everywhere, it all depends with how diligent are you as a business owner in safeguarding your reputation and how good you are in business ethics.

The most loyal employee may commit financial fraud and steal from the company if the opportunity arises and the temptation becomes too great.

The four basic types of financial fraud are:

Embezzlement

Embezzlement, also called larceny, which is the illegal use of funds by a person who controls those funds. For example, a bookkeeper may use company money for his own personal needs. Many times, embezzlement stories don’t make it into the paper because businesspeople are so embarrassed that they choose to keep the affair quiet instead. They usually settle privately with the embezzler rather than face public scrutiny.

Theft

Internal theft, which is the stealing of company assets by employees, such as taking office supplies or products the company sells without paying for them. Internal theft is often the culprit behind inventory shrinkage.

Kickbacks

Payoffs and kickbacks are circumstances in which employees accept cash or other benefits in exchange for access to the company’s business, often creating a scenario where the company that the employee works for pays more for the goods or products than necessary. That extra money finds its way into the employee’s pocket who helped facilitate the access.

In reality, payoffs and kickbacks are a form of bribery, but few companies report or litigate this problem.

Skimming

Skimming happens when employees take money from receipts and don’t record the revenue on the books.

The financial misconduct that hits small businesses the firmest is embezzlement.

Author: Gesture Chidhanguro

4 basic types of financial fraud Reviewed by on . Fraud is everywhere, cover ups are everywhere, it all depends with how diligent are you as a business owner in safeguarding your reputation and how good you are Fraud is everywhere, cover ups are everywhere, it all depends with how diligent are you as a business owner in safeguarding your reputation and how good you are Rating: 0
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