At this year’s FAE Business and Industry Conference, experts Anthony M. Bracco and Brian Sanvidge offered a closer look at the source of most occupational fraud. 

Through a series of investigations, Bracco and Sanvidge showed that most schemes thrive on weak oversight rather than sophisticated deception. Asset misappropriation remains the most common category, often through billing schemes that route payments to shell vendors for vaguely defined services. Bracco explained that fraudulent invoices are “typically for services rather than goods, because someone would expect to be able to identify the goods.”

Payroll manipulation and expense reimbursement padding show up where access rights are too broad, and reconciliations are sporadic. Fraudulent financial reporting is less common but more damaging, especially when used to hide other theft by parking amounts on the balance sheet. 

One example involved counterfeit checks directed at New York State. “If it wasn’t for the positive pay, those checks would all have been paid... it was over $50,000,” Sanvidge said. In another, decentralized processes during hybrid work enabled multi-year thefts before unusual activity surfaced elsewhere.