What are the three major categories of occupational fraud?

The correct answer identifies the three major categories of occupational fraud as asset misappropriation, corruption, and fraudulent statements.

Asset misappropriation involves the theft or misuse of an organization’s resources, such as cash, inventory, or other assets, by an employee or individual in a position of trust. This is often the most common type of occupational fraud, as it can take many forms, including embezzlement and skimming.

Corruption refers to acts that involve an employee abusing their position to gain a personal benefit, often at the expense of the employer. This can include bribery or kickbacks, where an employee accepts something of value in exchange for altering their actions or decisions.

Fraudulent statements concern the intentional misstatement or omission of information in an organization’s financial reporting. This type of fraud misleads stakeholders and can have significant consequences for the organization and its employees.

Together, these categories encompass the primary ways that occupational fraud manifests within organizations, enabling investigators and fraud examiners to classify and understand the nature of these fraudulent activities effectively. Understanding these categories is essential for implementing proper controls and detection mechanisms to reduce the risk of fraud within an organization.