FIG. 3 OCCUPATIONAL FRAUD AND ABUSE CLASSIFICATION SYSTEM (THE FRAUD TREE)3 Corruption Asset Misappropriation Financial Statement Fraud Net Worth/ Net Income Overstatements Net Worth/ Net Income Understatements Invoice Kickbacks Timing Differences Timing Differences Bid Rigging Fictitious Revenues Understated Revenues Concealed Liabilities and Expenses Overstated Liabilities and Expenses Improper Asset Valuations Improper Asset Valuations Improper Disclosures Improper Disclosures Conflicts of Interest Bribery Purchasing Schemes Sales Schemes Illegal Gratuities Economic Extortion Inventory and All Other Assets Cash Theft of Cash on Hand Theft of Cash Receipts Skimming Receivables Sales Unrecorded Understated Write-Off Schemes Lapping Schemes Cash Larceny Refunds and Other Fraudulent Disbursements Billing Schemes Payroll Schemes Expense Reimbursement Schemes Check and Payment Tampering Register Disbursements Shell Company Ghost Employee Mischaracterized Expenses Forged Maker False Voids NonAccomplice Vendor Falsified Wages Overstated Expenses Forged Endorsement Personal Purchases Commission Schemes Fictitious Expenses Altered Payee Multiple Reimbursements Authorized Maker Unconcealed 3 10 Misuse The definitions for many of the categories of fraud schemes in the Fraud Tree are found in the Glossary of Terminology on page 94. HOW IS OCCUPATIONAL FRAUD COMMITTED? Occupational Fraud 2022: A Report to the Nations Larceny Asset Requisitions and Transfers False Sales and Shipping Purchasing and Receiving False Refunds Unconcealed Larceny
