The purpose of this chapter is to provide an overview of the favorite target of occupational fraud offenders: the organization's assets. Before defining assets, let us first learn what constitutes misappropriation. According to Black's Law Dictionary, misappropriation is
The application of another's property or money dishonestly to one's own use.1
The definition in Merriam‐Webster's is similar: “to take (something, such as money) dishonestly for your own use; to appropriate (something) wrongly.”2 For our purposes, misappropriation includes more than theft or embezzlement. It also involves the misuse of any company asset for personal gain. Therefore, employees using a company computer after hours for their own side business have not stolen an asset, but they have misappropriated it for their own benefit.
DEFINITION OF ASSETS
In commerce, the purpose of assets is to produce income. If a business produces oil, the rigs, trucks, and even the land are all assets. Should the business sell clothing, its merchandise and display cases are assets. Assets can be defined as “probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. In brief, assets represent the amount of resources owned by the entity.”3
Because of the breadth of this accounting definition, ...
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