Which of the following is a type of fraud occurring within an organization?

Internal fraud refers to fraudulent activities that occur within an organization, typically perpetrated by employees or insiders. This type of fraud can take many forms, such as embezzlement, theft of company assets, or manipulation of financial records for personal gain. Internal fraud leverages the insider knowledge and access that employees have, which can make it particularly challenging to detect and prevent.

The significance of recognizing internal fraud lies in the fact that it undermines the organization’s integrity and can lead to substantial financial losses, reputational damage, and legal consequences. Organizations often implement various internal controls and surveillance measures to mitigate the risk of internal fraud, demonstrating the importance of maintaining a vigilant approach to ethical practices and compliance.

In contrast, external fraud typically involves external parties attempting to deceive the organization for financial gain, whereas identity theft relates specifically to unauthorized use of another individual's personal information. These types differ fundamentally from internal fraud, which originates from within the organization itself. Financial fraud encompasses a broader range of fraudulent activities but does not specifically indicate the source as being internal, making internal fraud the most precise choice in identifying the context provided in the question.