What Are the Common Types of Financial Fraud?

Common financial fraud types include diverted supplier payments, false invoicing, false expense claims, payroll manipulation, cheque misuse and dishonest procurement. Choose the guide for the process behind the payment you’re examining. A suspicious transaction warrants investigation, but does not establish dishonesty by itself.

Choose a Fraud Guide by Payment Process

For supplier payments, the accounts payable guide covers insider misuse of vendor records and payment controls. Start there when a supplier account changes unexpectedly or a supplier appears to have been paid twice. The invoice fraud guide focuses on the bill itself, including a false charge or altered payment instructions. Scamwatch describes payment redirection through changed invoice details, where money intended for a genuine business reaches a scammer.

Employee spending leads to the expense fraud guide when the concern is a personal purchase, an inflated reimbursement or the same cost claimed twice. Use the payroll guide for wage payments involving fictitious employees, inflated pay or changed recipient accounts. A staff reimbursement and a wage payment need different supporting records, even if both reach the same person.

The cheque fraud guide addresses forged or altered cheques, counterfeit cheques and the use of clearing delays to create apparent funds. Procurement fraud concerns how the organisation chooses suppliers and approves purchases. Its guide covers manipulated tenders, split orders and undisclosed conflicts. An inflated supplier payment can involve both procurement decisions and a false invoice. Select the guide for the part of that sequence you need to explain.

Start With the Records You Hold

Bank statements show money entering or leaving the supplied accounts. Invoices help explain what a supplier billed and which payment instructions the business received. Vendor records and change logs help distinguish a payment diverted inside the payables process from an altered invoice received from outside.

For employee payments, payroll records show who was due to be paid and on what basis. Expense claims and corporate card statements address staff purchases and reimbursements. Cheque images help explain the payee and amount on a disputed cheque. Tender files and approval records explain how a purchase was selected and authorised.

Compare the payment with its supporting records before classifying the concern. An administrative error or an authorised adjustment can explain an apparent mismatch. The Commonwealth Fraud Prevention Centre distinguishes fraud from carelessness, accident or error.

For help with statement-led analysis, read about fraud investigation services. If your task is to assess exposure across the organisation, use the fraud risk assessment guide.