The Association of Certified Fraud Examiners (ACFE) has developed a fraud tree which categorizes types of fraud schemes into the following three primary areas:

  • Corruption
  • Asset Misappropriation
  • Financial Statement (FS) Fraud

Previous courses have addressed corruption and asset misappropriation related to fraudulent disbursements and financial statement fraud.   This course addresses asset misappropriation – specifically related to inventory and other assets.

To identify how fraud can be mitigated, individuals must understand the types of fraud most prevalent to their business.  Asset misappropriation is a scheme in which an employee steals or misuses the employing organization’s resources. Considering inventory and other assets, there are multiple methods in which fraud can occur.  These extend through the raw materials, work in process, and final goods stages.  It can relate to employee theft, vendor fraud or accounting irregularities.  This session will focus on the many methods involved in inventory fraud.

Note: Information within this course comes from readily available public domain documents and is utilized by the trainer as a supplement for relaying the course content.

Learning Objectives
  • Explore the penalties for asset misappropriation.
  • Recognize the definitions of inventory and other assets.
  • Identify types of inventory fraud and relevant red flags within the raw materials and Work in Process (WIP) categories.
  • Explore the concept and relevant red flags for misstating inventory value.
  • Explore the concepts and red flags of accounting inventory type frauds.
  • Identify prevention methods for inventory fraud.
  • Explore the concept and relevant red flags for “other assets” fraud.
Last updated/reviewed: March 6, 2024

Included In Certifications

This course is included in the following Certification Programs:

11 CoursesBusiness Fraud Identification and Prevention Certification

  1. Introduction to Forensic Accounting
  2. The Fraud Triangle
  3. Fraud: Focus on Corruption
  4. Fraud: Focus on Fraudulent Disbursements
  5. Fraud: Focus on Cash And Assets
  6. Fraud: Focus on Inventory
  7. Fraud: Focus on Financial Statement Fraud – Part One
  8. Fraud: Focus on Financial Statement Fraud – Part Two
  9. Fraud and COSO 2013
  10. Top Occupational Fraud Schemes and Deterrents
  11. Fraud Risk Assessments
45 Reviews (170 ratings)

Reviews

5
Anonymous Author
Another excellent overview. Particularly, the aspect of misstatements of inventory balances (either direction) for differing end-goals. The touching on fraud within the WIP cycle (including for Labor/Overhead) are underappreciated in many contexts (such as government-purchasing or review of government contractors, etc.).
5
Member's Profile
Aside from CASH, Inventory seems like the most vulnerable asset subject to fraud. The volume of transactions make it difficult to measure and control. Lynn does a nice job of leading us through the challenges with Inventory fraud. Another GREAT Lynn Fountain course. Thank you, Lynn Larry
4
Member's Profile
The course did a great job of highlighting the potential areas of fraud in the inventory area. This course is a great jumping off point to delve deeper into fraud and internal controls around inventory.
5
Member's Profile
This course provides valuable information and tools in understanding how fraud could occur with inventory and other assets, in addition to ways to help prevent or minimize losses. Great course!
5
Anonymous Author
Working at a company with inventory means this is always a risk that needs to be understood. As it stands right now, we are looking into multiple frauds within our different subsidiaries.
5
Anonymous Author
the inventory is main and important account on all the balance sheet in all the business and the course provide a lot of good information to detect and prevent fraud of the inventory.
5
Member's Profile
As a Capital Assets Accountant, I thoroughly enjoyed the segment related to Materials and Work in Progress (WIP). Instructor was clear, and documentation provided was effective.
5
Anonymous Author
Good review on types of inventory fraud, misstating inventory balances and fraud prevention. The instructor does a good job in explaining and providing examples.
5
Anonymous Author
The course is very informative and structured. It provides detailed situational samples such as red flags and methkds on how to prevent and manage fraud.
5
Anonymous Author
Another great course from Lynn, who is in my opinion, one of the best instructors here. Multiple real life examples make this course of a high value.
5
Member's Profile
Lynn Fountain did an excellent job of presenting the course. She provided good examples and methods to mitigate fraud in inventory and other assets.
5
Anonymous Author
A very important topic for internal auditors and top management. Should be advertised and preventive measures implemented implemented as presented.
5
Anonymous Author
The course presents very useful information on fraud related to inventory and other assets in a very interesting and easy to understand manner.
4
Anonymous Author
I like this course so much I just wish there were more fraud courses delivered in this modular video formats for my CFE requirement of CPE.
5
Member's Profile
this was a good review and reminder to pay close attention to inventories of clients and employers. The material was clear and concise.
5
Anonymous Author
Good overall course with some very solid points. Very helpful when trying to get some ideas to build out an audit plan in this area.
5
Member's Profile
Good discussion on inventory fraud especially for manufacturing and retail. Also some extra coverage about non-inventory assets.
4
Member's Profile
Another good course from Lynn Fountain. She's very consistent at providing well-organized and informative presentations.
4
Member's Profile
After viewing all of Lynn's courses i have a good understanding of fraud schemes and controls to mitigate the risk.
5
Anonymous Author
Excellent course on fraud. Rally liked the discussion on prevention methods companies can implement to stop fraud.
5
Anonymous Author
Lynn Fountain never disappoints. The course Fraud: Focus on Inventory is thorough, interesting and informative.
4
Anonymous Author
Another great course from Lynn Fountain. Full of examples and real. Life scenarios. Thanks for the course!
4
Anonymous Author
The course is very informative and structured. It provided a good overview of frauds related to inventory. .
5
Member's Profile
An excellent coverage of inventory-related fraud that can be applied across a wide range of industries.
5
Member's Profile
Simple and effective course covering inventory basics and asset misappropriation. very easy to follow.
5
Anonymous Author
Good principles for fraud awareness. Useful information on red flags that should be investigated.
5
Member's Profile
Good course. I think this was the last of the these fraud type courses that are/were related.
5
Member's Profile
Good basic introduction to inventory fraud with a lot of possibilities and scenarios provided.
4
Anonymous Author
Interesting and refresher course on fraud inventory. Everyone will benefit from this training.
4
Member's Profile
Class was very informative. Great points mentioned as pertained to inventory! Would recommend.
4
Anonymous Author
I like the fact that it describes that anyone can commit different ways of inventory frauds
5
Member's Profile
great class learned a lot on how to handle inventory and how to be even more transparent.
4
Anonymous Author
The speaker provides great examples on different inventory fraud and how to prevent it.
5
Anonymous Author
This course was beneficial, because of how critical fraud has become in the work place.
5
Anonymous Author
This was great course to understand and identify fraud schemes relating to inventory.
5
Member's Profile
Nice refresher on the importance of managing fraud risks in the inventory account.
5
Anonymous Author
This course provides a good understanding of the methodology of inventory fraud.
5
Member's Profile
Great job on a relevant topic. Good course for retail related teams.
4
Member's Profile
very good content and excellent lecturer. I recommend this course.
3
Anonymous Author
THE COURSE COULD HAVE MORE REAL LIFE EXAMPLES OF INVENTORY FRAUD
5
Member's Profile
Interesting course, particularly if you like the Balance Sheet.
5
Member's Profile
Good information about red flags and schemes within inventory.
5
Member's Profile
Good discussion on inventory fraud and what to look out for.
4
Member's Profile
you should show people what they got wrong in the exam.
5
Anonymous Author
very informative.good aspects explained on inventory
show all reviews
Prerequisites
Course Complexity: Intermediate

No Advanced Preparation or Prerequisites are needed for this course. However, it is recommended to take the other courses in the series prior to completing this one.

Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Instructor for this course
  Course Overview CPE
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to Fraud Tree: Focus on Inventory and Other Assests7:24
Focus on Inventory
  Inventory and Other Assests17:51
  Types of Inventory Fraud: Raw and Materials/WIP14:12
  Red Flags15:01
  Misstating Inventory Balances13:38
  Prevention13:36
CONCLUSION
  Other Assets6:39
CONTINUOUS PLAY
  Fraud Tree: Focus on Inventory 1:28:22
SUPPORTING MATERIALS
  Slides: Fraud Tree: Focus on InventoryPDF
  Fraud Tree: Focus on Inventory Glossary/IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam