Fidelity insurance usually does not cover damages resulting from not having the potential income that could have been earned with the assets stolen. Insurance only covers the loss: you get no money for the inability to collect interest on the cash stolen. The insurance is intended to cover solely the intrinsic value of company assets.
According to cfo.com, the main ways in which employees commit fraud include the following:
Misappropriation of cash: Skimming
Employees who receive cash can steal it before it is recorded in the accounting system. This is very difficult to detect. It happens when an employee sells a product or service to a customer but payment goes directly into the pocket of the employee.
How to detect this? Loss of gross margin and inventory shortages are good indicators.
Misappropriation of cash: Larceny
This is theft of assets that have already been entered in the accounting records. The most obvious example is money stolen from a cash register. Larceny can be detected by audit if effective internal controls are in place.
Fraudulent disbursements
In billing fraud, an employee creates fraudulent invoices and processes them, or makes personal purchases on a company credit card.
In payroll fraud, an employee falsifies payroll documents and creates fictitious employees who don’t work for the company but are included on the payroll.
In expense reimbursement fraud, an employee manipulates reimbursement reports to obtain reimbursement which should not be paid, or the employee overstates costs. An employee might also create modified invoices for purchases and request reimbursement.
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