FRAUD SCHEMES
CORRUPTION
In which fraudsters wrongfully use their influence in a business transaction in order to
procure some benefit for themselves or another person, contrary to their duty to their
employer or the rights of another (Common examples include accepting kickbacks, and
engaging in conflict of interest)
Conflict of interest
Purchases Schemes
Sales Schemes
Other
Bribery
Invoice kickbacks
Bid Rigging
Illegal gratuities
Economic extortion
ASSET MISAPPROPRIATIONS
Which involve the theft or misuse of an organization’s assets (common examples include
skimming revenues, stealing inventory and payroll fraud).
CASH
a. LACERNY
In which cash stolen from an organization after it has been recorded on the
organizations books and records.
Of Cash on hand
From the deposit
Other
b. FRADULENT DISBURSMENT
In which the perpetrator causes his organization to disburse funds through some
trick or device. Common examples include submitting false invoices or forging
company checks.
Billing schemes
In which a fraudster causes the victim organization to issue a payment by
submitting invoices for fictitious goods or services, inflated invoices, or invoices fro
personal purchases.
Shell company
Non-Accomplice Vendor
Personal Purchases
Payroll Schemes
In which an employee causes the victim organization to issue a payment by making
false claims for compensation.
Ghost Employees
Commission Schemes
Workers Compensation
Falsified Wages
Expense Reimbursement Schemes
In which an employee makes a claim for reimbursement of fictitious or inflated
business expenses.
Mischaracterized Expense
Overstated Expenses
Fictitious Expense
Multiple Reimbursements
Check Tampering
In which the perpetrator converts an organization’s funds by forging or altering a
check on one of the organization’s bank accounts, or steals a check the organization
has legitimately issued to another payee.
Forged Maker
Forged Endorsement
Altered Payee
Concealed Checks
Authorized Maker
Register Disbursements
In which an employee makes false entries on a cash register to conceal the
fraudulent removal of currency.
False Voids
False Refunds
c. SKIMMING
In which cash is stolen from an organization before it is recorded on the
organization’s books and records
Sales
Unrecorded
Understated
Receivables
Write off schemes
Lapping schemes
Unconcealed
Refunds & Other
INVENTORY AND ALL OTHER ASSETS
Misuse
Larceny
Assets req. & transfers
False sales & shipping
Purchasing and receiving
Unconcealed larceny
FRAUDULENT STATEMENTS
Which generally involve falsification of an organization’s financial statements (common
examples include overstating revenues and understating liabilities or expense).
Financial
a. Assets/Revenue overstatements
Timing differences
Fictitious Revenue
Concealed Liabilities
Improper Disclosures
Improper Assets Valuations
b. Assets/Revenue understatements
Non Financial
Employment credentials
Internal documents
External documents
Notes :
According to published literature fraud scheme categorized into :
1. Corruption
2. Assets misappropriations
3. Fraudulent Statements
Definitions of each categorization have been described above.
Sources :
Internet publication, educate website.
