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What is misappropriation of assets and what controls mitigate it?

Beginner

Answer

Misappropriation of assets is theft of an entity's assets—skimming cash, fraudulent disbursements, payroll/expense fraud, or stealing inventory—usually concealed with false records. Mitigating controls include segregation of duties, physical safeguards, reconciliations, authorization limits, and independent reviews. It's often committed by employees and individually may be immaterial.
Real-world example Requiring independent approval and reconciliation of disbursements deters an employee from creating fake vendor payments.

Common follow-ups: What controls deter asset misappropriation? | Who commonly commits it?

Internal Controls Evaluation Audit Risk & Materiality Fraud & Error Responsibilities
All 18 Fraud & Error Responsibilities questions