Internal Auditor

April, 1998, pgs (30-33)

A Classification System for
Occupational Fraud and Abuse

FRAUDULENT STATEMENTS

   o  Financial
          >  Timing Differences
          >  Fictitious Revenues
          >  Concealed Liabilities & Expenses
          >  Improper Disclosures
          >  Improper Asset Valuations

   o  Non-Financial
          >  Employment Credentials
          >  Internal Documents
          >  External Documents

CORRUPTION

   o  Conflicts of Interest
          >  Purchasing Schemes
          >  Sales Schemes
          >  Other

   o  Bribery
          >  Invoice Kickbacks
          >  Bid Rigging
          >  Other

ASSET MISAPPROPRIATION

   o  Inventory and All Other Assets
          >  Asset Requisitions and Transfers
          >  False Sales and Shipping
          >  Purchasing and Receiving
          >  Unconcealed Larceny

   o  Cash
          >  Larceny
               -  of cash on hand
               -  from the deposit
               -  other
          >  Fraudulent Disbursements
               -  billing schemes
                    :  shell company
                    :  non-accomplice vendor
                    :  personnel purchases
               -  payroll schemes
                    :  ghost employee
                    :  commission schemes
                    :  workers compensation
                    :  falsified wages
               -  expense reimbursements
                    :  mischaracterized expenses
                    :  overstated expenses
                    :  fictitious expenses
                    :  multiple reimbursements
               -  check tampering
                    :  forged maker
                    :  forged endorsement
                    :  altered payee
                    :  concealed checks
                    :  unauthorized maker
               -  register disbursements
                    :  false voids
                    :  false refunds
          >  Skimming
               -  sales
                    :  unrecorded
                    :  understated
               -  receivables
                    :  write-off schemes
                    :  lapping schemes
                    :  unconcealed