Uphando Forensics

5 Types Of Fraud That Can Shake Your Business

The impact fraud can have on a business can be monumental. Not only can it have a financial impact, but, depending on the type and severity, it can also destroy a business. While there are many types of fraud, below are five that can cause the most damage.

1. Financial statement fraud

Overstating revenue, earnings, and assets along with understating liabilities (or just plain concealing them) are the most common activities found with this type of fraud.

2. Asset misappropriation

Skimming of cash and cash larceny – This type of asset misappropriation consists of taking cash before it even enters the company’s accounting system. It’s very hard to uncover because it requires finding evidence of something that hasn’t been recorded yet. And, it doesn’t require a lot of sophistication to execute, making it a popular choice among those that commit fraud.

Misuse of company assets – Another common type of asset misappropriation is the misuse of company assets. Not only is it problematic since it’s the unauthorized use of company assets, but it can also open up the company to significant liability.

3. Theft of intellectual property and trade secrets

As our world becomes increasingly driven by information and technology, an increase in the theft of intellectual property and trade secrets is on the rise.

4. Healthcare, insurance, and banking

Healthcare, insurance, and banking are all industries that have billions of rands flowing through their systems, making them prime targets for this type of fraudulent activity. False medical aid claims, business insurance claims, and fraudulent bankruptcies are all ways individuals commit this type of fraud.

5. Consumer fraud

Individuals targeted through cons, false telemarketing, email, Ponzi schemes, phishing, identity theft, and other schemes, are all victims of consumer fraud. Whether it’s an organization system breach or a false tax return filed for large refunds, consumer fraud is on the rise. Companies can also be victims of email phishing scams especially spear phishing, which involves sending targeted, disguised emails that contain malicious links.

Fraud can take many shapes and can impact an organization in many ways not just financially. You should know how and where your company may be vulnerable and take the correct steps to protect your company against such vulnerabilities. Contact Uphando for assistance.