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.

Thank you to ACFE’s Report to the Nations!

Sarah Purifoy