Misappropriation of assets
Misappropriation of assets is a term used to explain illegal activities within
the workplace. It occurs when a person steals from your business. It can be a
small business or a large corporation. It occurs when an employee or third party
abuses their position to steal using fraud or theft.
Offenders can be company directors, senior personnel, or general employees.
Any other person entrusted to manage the assets and interests of the company
may also offend. This may include but not be limited to external accountants,
consultants, or contractors. There is also the potential for external suppliers to
steal either in the company with an employee or by themselves. The latter may
include providing inferior goods and services [ACCA].
Misstatements arising from the misappropriation of assets (sometimes
referred to as theft or defalcation) involve the theft of an entity's assets where
the effect of the theft causes the financial statements not to be presented, in all
material respects, in conformity with GAAP. Misappropriation of assets can be
accomplished in various ways, including embezzling receipts, stealing assets, or
causing an entity to pay for goods or services that have not been received.
Misappropriation of assets may be accompanied by false or misleading records
or documents, possibly created by circumventing controls. The scope of this
section includes only those misappropriations of assets for which the effect of
the misappropriation causes the financial statements not to be fairly presented,
in all material respects, in conformity with GAAP [PCAOB].
Asset Misappropriation – Theft and Fraud in the Workplace. ACCA. Retrieved from: https://www.acca-aust.com.au/asset-misappropriation/
AS 2401: Consideration of Fraud in a Financial Statement Audit. PCAOB. Retrieved from: https://pcaobus.org/oversight/standards/auditing-standards/details/AS2401