Profiling The Fraudster: Removing the Mask to Prevent and Detect Fraud

Chapter 2Types of Occupational Fraud and Corruption

MOST OCCUPATIONAL FRAUD AND CORRUPTION SCHEMES use one or more of the following embedded techniques: abuse of power, embezzlement, misuse of business time, computer fraud, stock and equipment pilferage, and expense abuse.

• Abuse of power. This scheme involves making inappropriate financial decisions to benefit the employee rather than the organization. For example, the employee signs contracts with more expensive outside vendors and receives a kickback in return. Kickbacks are a form of corruption, also defined as an abuse of one's position of power.
• Embezzlement. One of the most common occupational frauds is the manipulation of accounting records to steal business funds. Financially astute employees may be able to devise sophisticated schemes to cover their theft. This is called misrepresentation, one of the characteristics of fraud.
• Misuse of business time. Employees who perform nonwork-related functions while at work are committing fraud because they are depriving the business of employee productivity during that time. The act of fraud itself is also included in this category. Alternatively, running a personal business from the employment office constitutes theft of time, as does the time occupied by committing fraudulent activity.
• Computer fraud. The advent of modern technology has provided more opportunities for employees to commit computer or electronic fraud, facilitating the electronic manipulation of business funds ...