Fraud against a business includes the theft of physical assets including cash (particularly in a retail setting) or inventory. The theft of inventory is typically perpetrated by an employee and can be discovered rather quickly in an environment where there are strong internal controls.

There are essentially two types of inventory fraud: actual physical loss and financial statement fraud. It is not unusual to find that a business is the victim of both types of fraud (theft and financial statement fraud) simultaneously since the occurrence of either indicates lax internal controls.

Read article: Inventory Fraud: Detecting, Preventing & Prosecuting