How are frauds typically divided?

Frauds are commonly divided into two main categories: those perpetrated against organizations and those committed on behalf of organizations. This classification emphasizes the context in which the fraud occurs and helps fraud examiners understand the motivations and methods of different fraud types.

Frauds against organizations typically involve schemes where external parties seek to defraud a company, such as through theft, deception, or fraud-related scams. On the other hand, frauds committed on behalf of organizations often involve employees or insiders who exploit their position within the organization to perpetrate fraudulent activities, such as embezzlement or procurement fraud.

This distinction is significant because it influences how fraud is investigated, the preventative measures organizations can take, and the legal implications surrounding these acts. Understanding whether the fraud is executed against or on behalf of an organization can better guide responses and mitigative strategies tailored to each type's unique risks and characteristics.