These four basic types of internal financial fraud cost businesses ten times more than all other crimes against businesses combined:

• Embezzlement, also called larceny, is the illegal use of funds by a person who controls those funds. For example, a bookkeeper may use company money for his own personal needs. Many times, embezzlement stories don’t make it into the paper because businesspeople are so embarrassed that they choose to keep the affair quiet instead. They usually settle privately with the embezzler rather than face public scrutiny.
• Internal theft is the stealing of company assets by employees, such as taking office supplies or products the company sells without paying for them. Internal theft is often the culprit behind inventory shrinkage.
• Payoffs and kickbacks are situations in which employees accept cash or other benefits in exchange for access to the company’s business, often creating a scenario in which the company that the employee works for pays more for the goods or products than necessary. That extra money finds its way into the pockets of the employee who helped facilitate the access. In reality, payoffs and kickbacks are a form of bribery, but few companies report or litigate this problem (although sometimes employees are fired when deals are uncovered).
• Skimming occurs when employees take money from receipts and don’t record the revenue on the books.