Unraveling the Complexity of Asset Misappropriation: A Dive into Sub-Schemes
Asset misappropriation, a prevalent form of occupational fraud, manifests in various forms, contingent upon the perpetrator's access or opportunities within a victim organization. The Fraud Tree taxonomy categorizes these into nine distinct sub-schemes, each delineating a unique method of committing the fraud. This classification is crucial for organizations seeking to understand and mitigate their risk exposure to these fraud types. A closer examination, as detailed in the provided glossary, reveals the nuances of these schemes, aiding in the development of targeted risk assessment strategies to minimize potential fraud losses.
A significant insight comes from analyzing the median loss and frequency of occurrence of these sub-schemes, presented through a heat map on page 13 of the 2024 Report to the Nations. Among them, check and payment tampering, billing schemes, and theft of non-cash assets emerge as the most hazardous, finding themselves nearest to the yellow zone of the map. This designation indicates a higher overall risk to organizations, attributed to their prevalent occurrence and substantial financial impact. Recognizing these sub-schemes as primary areas of concern allows for the refinement of internal controls and preventive measures, aiming to safeguard organizational assets against the multifaceted threat of asset misappropriation.