Background

Occupational fraud has become a major concern for any nonprofit organization. So, implementing effective fraud risk management system is very important in development organizations.

Occupational Fraud

Occupational fraud is a type of fraud committed by employees of an organisation against employer organisation. Accordingly, employees of the organisation utilize their role or employment as a factor for personal gain in a way that is an inappropriate use of the organization’s property, assets, or other resources. Occupational fraud causes huge losses to different countries every year

Types of Fraud Committed

The Association of Certified Fraud Examiners (ACFE) conducts extensive research on occupational fraud and abuse across the globe every year. The latest report available to public is: 2018 Global Study on Occupational Fraud and Abuse.

ACFE classifies occupational fraud into cash fraud and non-cash fraud. The first type of classification, i.e., cash fraud includes theft of cash in hand, theft of cash receipts, fraudulent payments. On the other hand, non-cash fraud include misuse of assets and assets pilferage. Further, there are three categories of occupational fraud:

Asset Misappropriation

This category of fraud involves stealing or otherwise misusing company property. Asset misappropriation fraud is classified as follows:

Corruption

Corruption may take the form of getting some form of personal gain, like kickbacks or other benefits, in exchange for some business benefit the employee confers, such as awarding a contract. Further, such type of fraud could be classified as bribery, conflict of interest, illegal gratuities, and economic extortion.

Financial Statement Fraud

Financial statement fraud is the intentional misrepresentation of financial information that is communicated to the donor, regulator, general public or other stakeholders. Further, this type of fraud is classified into understatement or overstatement of revenue, revenue or expenditure timing schemes, non-recording or under recording or over recording of liabilities or expenses, and undisclosed contingent liabilities.

Corruption in Asia Pacific

Study by ACFE shows that corruption is Asia Pacific (38%) is much higher than global corruption (38%). However, global corruption data include Sub-Saharan Africa. If Africa is excluded, situation of Asia pacific would be further worse.

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