Types Of Financial Fraud In Businesses

Identity theft

This occurs when one steals personal information and profits from the funds in that person’s name. It usually occurs when a credit card or social security number is stolen and used. Businesses can be affected as fraudsters can steal from them using the business identity. Businesses are vulnerable to identity theft as their account information can be easily accessed and used to steal funds from them.

Embezzlement

This happens when a person controlling the funds in a company illegally uses those funds for their own benefit. Embezzlement can be crippling to the business as they may lose a lot of money meant to build and grow the business. This includes channeling of funds to benefit certain individuals at the expense of the company. It is usually done by Accountants and senior management

Bribery and corruption

This occurs when personnel are paid for access to the company or products and services without following the proper channels. It can also happen within the company where other employees pay for promotions. The money received during bribes is pocketed by the employees. Corruption also involves those in the superior positions using money and power to oppress those beneath.

Skimming

This type of financial fraud occurs when employees take money and put it into their own pockets and do not record it into the revenue books. Skimming requires the accountants and senior management to thoroughly investigate in order to avoid loss of money in the business.

Payroll fraud

This happens when employees lie about the hours they worked on their timesheets and get paid for the wrong hours. It also happens when employees ask for salary advances and keep quiet about it if the account does not remember.