Fraud 1

A process of resolving allegations of fraud from inception to disposition. It involves not only financial analysis, but also taking statements, interviewing witnesses, writing reports, testifying to findings, and assisting in the detection and prevention of fraud

The methodology used to investigate allegations of fraud. It involves developing a theory based on the worst-case scenario of what fraud scheme could have occured, then testing the theory to see if it is correct

The use of one's occupation for personal enrichment through the deliberate missuse or missapplication of the empolying organization's resources or assets

• Any crime for gain that uses deception as its principal modus operandi. There are four legal elements that must be present
• a material false statement
• knowledge that the statement was false when it was uttered
• reliance on the false statement by the victim
• damages as a result

Petty crimes committed against organizations, suc as taking excessively long lunch hours or breaks, coming to work or leaving early, using sick time when not sick, and pilfering supplies or products

In business, the trusting relationship that the employee is expected to hold toward the employer, requiring the employee's scrupulous good faith to act in the employer's best interests

The unauthorized assumption of a right of ownership over the goods of another to the exclusion of the owner's rights. When an employee steals company assets, he is converting the use of them

The unlawful taking a carrying away of property of another with the intent to convert it to one's own use

Coined by sutherland, originally defined as crimminal acts only of corporations and of individuals acting in their corporte capacity, but is now used to define almost any financial or economic crime

• A Model developed to explain the research of Cressy, who noted that most occupational frauds were caused by a combination of three elements:
• nonshareable financial problems
• perceived opportunity
• the ability to rationalize conduct

Financial difficulties that would be hard for a potential occupational offender to disclose to outsiders, such as excessive debt, gambling, drug use, business reversals, or extramarital affairs

• 6 categories are:
• Violation of ascribed obligations
• problems resulting from personal failure
• business reversals
• physical isolation
• status gaining
• employer-Employee relations

The thought process by which an occupational frauder explains and justifies his illegal conduct

conduct by employees that is detrimental to both employer and employee, such as goldbricking, work slowdown, and industrial sabotage

Primary cause is job dissatisfaction

Deterrence mechanisms used by organizations to discourage employee deviance and fraud includes inventory control, selection of personel, company policies, security, and punishment

Informal deterrence mechanisms that help discourge employee deviance and fraud and such as loss of prestige and embarassment of friends and family

The theft of an organizations cash after it has been recorded in the accounting system

Frauds that target incoming sales or receivables. Typically the perpetrators in these schemes physically abscond with the victims organization's cash instead of relying on phony documents to justify the disbursement of the funds

skimming and cash larceny

A method of concealing deposit theft that occurs when an employee steals part or all of the deposit one day and then replaces it with the receipts from subsequent days

schemes in which an employee illegally or improperly causes the distribution of funds in a way that appears to be legitimate. Funds can be obtained by forging checks, submission of false invoices, or falisfying time records

a method used to conceal cash larceny. The perpetrator processes false transactions to void a sale or refund cash, which cause sales records to reconcile to the amount of cash on hand after the theft

Theft of cash prior to its entry into the accounting system

Skimming that involves the theft of sales receipts, as opposed to payments on accounts receivable. Sles skimming schemes leave the victim organization's books in balance, because neither the sales transaction nor the stolen funds are ever recorded

A fraud that occurs outside the financial system and that therefore has no direct audit trail.

Skimming is the most common

A variation of a sales skimming cheme in which only a portion of the cash received in a sales transaction is stolen

a skimming method whereby the fraudster steals and unrecorded check and substitues it for recorded currency in the same amount

skimming that involves the theft of incoming payments on accounts receivable. This is form of a skimming is more difficult to detect than sales skimming, because the receivables are already recorded on the victim organization's books

the key is to either conceal either that the payment was stolen or that the payment was due

A method of concealing the theft of cash designated for accounts receivable by crediting one account while abstracting money from a different account. This process must be continuously repeated to avoid detection

A method of concealing receivables skimming whereby the fraudster falsifies account totals to conceal the theft of funds

A Scheme in which a fraudster causes the victim organization to issue a fraudulent payment by submitting invoices for ficticious goods goods or services, inflated invoices, or invoices for personal purchases

a ficticious entity created for the sole purpose of commiting fraud

a situation in which two or more employees work together to commit fraud by overcoming a well designed internal control system

A subcategory of a shell company scheme in which actual goods or services are sold to the victim company, with the fraudster acting as a middleman and inflating the prices of the goods or services

A fraud in which an employee intentionally mishandles payments that are owed to legitimate companies, then steals the excess payments when they are returned by the vendor

A category of billing scheme in which an employee simply buys personal items with his company's funds, credit card or purchasing card