EXHIBIT 101 / THE HANDBOOK
EXHIBIT#113HIGH
Management & OwnershipComposite score: 48/100

Self-Dealing by Board Members

A director steers a company contract to a business they secretly own, undisclosed to the rest of the board.

Risk Scores

Frequency20
Financial Loss80
Detection Difficulty80
Prevention Ease80
Composite Score48/100

Perpetrator Roles

Accounting

Affected Formats

QSRFast Casual

Detection Difficulty

Extremely difficult to detect without automated monitoring. Manual audits rarely catch this scheme.

HOW IT WORKS
Board member has financial interest
Contract awarded to related party
Conflict not disclosed
Business overpays for service
Audit reveals undisclosed relationship
Handbook Chapter · F-093

Self-Dealing by Board Members

Full chapter with identity card, real examples, warning signs, detection and prevention guidance.

Exhibit AI Detection

AI-Powered Detection Design

Screen every material company transaction's counterparty against director ownership and known-associate records — the same technique used for executive embezzlement in F-076.

Prevention Guidance

Audit Controls

Standard audit procedures are effective. Regular cash counts and reconciliation catch this scheme early.

Technology

Automated POS monitoring, real-time exception reporting, and AI-driven anomaly detection significantly reduce exposure.

Culture & Training

Staff awareness programs, anonymous reporting channels, and clear consequence policies deter opportunistic fraud.

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