Making up around 89% of fraud cases, asset misappropriation is one of the most common forms of occupational fraud. Asset misappropriation is when an employee steals or misuses company assets and resources for their own personal gain.
Types of asset misappropriation
Asset misappropriation is a very broad term and can describe many different types of fraud. However, it is important that your company is prepared to deal with each and every type. Fraud can get out of hand quickly and end up costing your business hundreds of thousands of dollars over long periods of time.
Noncash (21% of cases)
Noncash misappropriation does not involve the theft of money. Instead, it involves the misuse of a company’s assets or services. This type of fraud is the most common because employees usually have easy access to these assets.
Examples of noncash asset misappropriation include:
- Unauthorised use of a company vehicle.
- Borrowing or stealing equipment from the workplace.
- Abusing the paid services your company offers to customers
Protecting your business against noncash fraud:
You can help prevent noncash fraud by enforcing strict rules surrounding the use of company services, equipment and assets. For example, each employee should have till fill out a form explaining their reasoning for using a company car. They should also have to specify when they will bring it back.
Abuse of company services should also be punished. This ensures that your staff aren’t wasting company time and equipment on “free” work.
Expense reimbursement fraud (14% of cases)
Expense reimbursement fraud is when bills and expenses are tampered with in a way where excess money is given to the employer. Below are some of the most common types of expense reimbursement:
- Mischaracterized expenses. This happens when an employee uses company money for their personal needs and claims the purchases as business expenses.
- Incorrect billing. An employee may design a fake document that appears genuine. I this document, they will claim illegitimate expenses.
- Overstated expenses. This is when an employee inflates the cost of a legitimate expense and pockets the extra money.
Protecting your business against expense reimbursement frauds:
The most effective way to reduce expense reimbursement fraud is to routinely check over the money that is going back and forth and compare the data to estimated or expected costs. If the expected cost doesn’t match the final cost, this is a sign that further investigation may be necessary.
If you don’t have the time to check over your expenses, we can help you with a forensic investigation. Contact us to learn more.
Payroll fraud (10% of cases)
Payroll fraud is generally performed by employees who have access to the payroll system. They will abuse the payroll system so that more money is given to their account.
Below are some of the most common forms of payroll fraud:
- Generation of fake employees – A user may create a fake employee in the payroll system whom money is deposited to every payday. Alternatively, they may use the account of an employee who has left the company.
- Unauthorised hours – An employee may add additional hours to their week, meaning they are paid more by the payroll system.
- Pay alteration – An employee may make changes to their hourly wage or salary via the payroll system.
Protect your company against payroll fraud:
The best way to protect yourself against payroll fraud is be routinely performing an audit over your payroll system. Be sure to delete all inactive payees and double-check wages and salaries.
We can investigate payroll fraud and occupational fraud in your workplace. Contact us