Name three common forms of asset misappropriation.

• A. Cash skimming, shell company or fictitious vendors, inventory theft.
• B. Payroll fraud and tax evasion.
• C. Embezzlement, insider trading, and money laundering.
• D. Phishing, social engineering, and identity theft.

Answer: (A)

Asset misappropriation happens when someone inside an organization steals or wrongfully uses the company’s assets. Three common forms you’ll often see are cash skimming, shell company or fictitious vendors, and inventory theft.

Cash skimming involves diverting cash before it’s recorded, so the business never reflects the money taken in its books. Shell company or fictitious vendors occur when payments go to fake vendors or accounts controlled by the fraudster, draining company funds. Inventory theft is the actual taking of physical goods—raw materials or finished products—that aren’t accounted for in inventory records.

These examples cover different asset types—cash, payables, and inventory—showing how internal theft can target various parts of the organization. Other options mix in crimes that aren’t purely internal asset misappropriation: payroll fraud can be a form of misappropriation but tax evasion is a tax crime, while insider trading, money laundering, phishing, social engineering, and identity theft describe broader fraud or financial crimes rather than typical internal misappropriation schemes.