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Introduction
Occupational fraud is a significant problem that affects businesses of all sizes and industries. It refers to fraudulent activities committed by employees in the course of their employment. According to the Association of Certified Fraud Examiners (ACFE), the median loss caused by occupational fraud is $150,000. In this article, we will discuss the most common source of occupational fraud in 2023.
Employee Theft
Employee theft is the most common source of occupational fraud. It occurs when an employee steals cash, inventory, or other assets from the company. There are several ways employees can commit theft, including:
- Stealing cash from the cash register
- Stealing inventory and selling it for personal gain
- Manipulating financial records to cover up theft
Employee theft can occur in any department of a company, but it is most common in finance and accounting departments.
Vendor Fraud
Vendor fraud occurs when an employee colludes with a vendor to defraud the company. This type of fraud can take many forms, such as:
- Submitting false invoices for payment
- Accepting kickbacks or bribes from vendors
- Overcharging for goods or services
Vendor fraud can be difficult to detect because it involves collusion between an employee and an external party.
Payroll Fraud
Payroll fraud occurs when an employee manipulates the company’s payroll system to receive unauthorized payments. This can be done in several ways, such as:
- Creating ghost employees and paying them
- Manipulating hours worked or rates of pay
- Altering tax withholding information to receive a larger paycheck
Payroll fraud is most common in companies with manual payroll systems or inadequate controls.
Expense Reimbursement Fraud
Expense reimbursement fraud occurs when an employee submits false or inflated expense reports for reimbursement. This type of fraud can take many forms, such as:
- Claiming expenses that were never incurred
- Inflating the cost of legitimate expenses
- Submitting personal expenses as business expenses
Expense reimbursement fraud is most common in companies with lax policies and inadequate controls.
Conclusion
Occupational fraud is a serious problem that can cause significant financial losses for businesses. The most common source of occupational fraud in 2023 is employee theft, followed by vendor fraud, payroll fraud, and expense reimbursement fraud. Companies can reduce the risk of fraud by implementing strong internal controls, conducting regular audits, and promoting a culture of honesty and integrity.
