Kautilya’s Ancient Blueprint: 10 Timeless Techniques of Financial Embezzlement and Fraud

What is realized earlier is entered later.

This form of embezzlement occurs when revenue or funds that are received at an earlier time are not recorded immediately. Instead, the entries are deliberately delayed, allowing the official to temporarily use or misappropriate the funds for personal benefit before the transaction is eventually recorded. This tactic helps obscure short-term misuse and makes reconciliation difficult during audits, giving the illusion of delayed revenue realization.

What is realized later is entered earlier.

This method involves prematurely recording expected income before it is actually received. It may be used to cover up missing funds or justify earlier expenditures. By showing future collections as already realized, officials manipulate financial records to portray a healthier cash flow, mask gaps, or buy time for later reconciliation—often concealing deeper financial mismanagement or fraud.

What ought to be realized is not realized

Officials may deliberately fail to collect dues, taxes, or revenue that the state is rightfully owed. This could be done in collusion with payers in exchange for bribes or favors. The loss to the state is often masked by underreporting or misclassification of accounts. This method benefits both the corrupt official and the payer at the expense of the treasury

What is hard to realize is shown as realized

Sometimes, collections that are unlikely or impossible to realize—due to legal issues, insolvency, or disputes—are fraudulently shown as collected in official records. This may serve to inflate performance metrics, close accounts prematurely, or cover up other discrepancies. It creates an illusion of successful administration but hides unresolved liabilities

What is collected is shown as not collected.

In this form, revenue or payments are actually received but are never entered into the official records. The funds are retained by the collector for personal use. By omitting the transaction entirely, the embezzler creates a shadow revenue stream that is difficult to trace unless independent verification or cross-checks are performed.

What has not been collected is shown as collected

Here, officials record revenue or payments that were never received. This may be used to falsely demonstrate that targets were met or to cover up shortfalls. It could also be used as a means to later siphon off funds that should have matched the phantom transaction, effectively backfilling the fraud

Partial collections are entered as full collections

When only a portion of the expected revenue is received, the full amount is nonetheless recorded. The discrepancy allows the official to pocket the difference. This type of fraud depends on lax oversight and weak controls, where verification of physical collections against records is rarely done or can be easily manipulated.

Full collections are entered as partial collections

Conversely, if the full amount is collected, the record reflects only a portion of it. The remaining amount is then misappropriated. This tactic is common where multiple agents or intermediaries handle cash or where transparency is low. The official uses this discrepancy to divert a portion of legitimate funds.

The item collected is of one sort, but entered as another

This involves misclassification or substitution of goods, services, or financial instruments. For example, a high-value item could be entered as a low-value one, enabling embezzlement of the difference. Alternatively, one type of tax or fee could be substituted for another with different accounting treatment, helping obscure the misuse

Revenue from one source is shown as from another

Misrepresenting the source of funds can help conceal illegal collections, unauthorized transactions, or misallocated budgetary funds. For instance, a bribe or unauthorized fee might be shown as a legitimate tax collection. This tactic disguises irregularities and undermines accountability, especially when cross-verification between departments is poor.