Which statement about asset misappropriation is correct?

Which statement about asset misappropriation is correct?

• A. Manipulation of financial statements to mislead investors; example: fictitious revenue.
• B. Inaccurate budgeting leading to overfunding.
• C. The theft or misuse of an organization's assets; examples include cash skimming and payroll fraud.
• D. Noncompliance with tax law.

Answer: (C)

Asset misappropriation is the theft or improper use of an organization’s assets by someone who has access to them. It’s a form of fraud where the loss comes from taking cash, inventory, or other resources for personal benefit rather than from falsifying financial statements. Common examples include cash skimming, where cash is diverted before it’s recorded, and payroll fraud, where time or wage records are manipulated to siphon funds. The other statements describe different issues: manipulating financial statements to mislead investors is financial statement fraud, not asset misappropriation. Inaccurate budgeting leading to overfunding is a budgeting or planning error, not theft or misuse of assets. Noncompliance with tax law is a regulatory/tax issue, not about stealing or misusing assets.

Asset misappropriation is the theft or improper use of an organization’s assets by someone who has access to them. It’s a form of fraud where the loss comes from taking cash, inventory, or other resources for personal benefit rather than from falsifying financial statements. Common examples include cash skimming, where cash is diverted before it’s recorded, and payroll fraud, where time or wage records are manipulated to siphon funds.

The other statements describe different issues: manipulating financial statements to mislead investors is financial statement fraud, not asset misappropriation. Inaccurate budgeting leading to overfunding is a budgeting or planning error, not theft or misuse of assets. Noncompliance with tax law is a regulatory/tax issue, not about stealing or misusing assets.