Final Exam Study Sheet

Chapter 1 Fraud examination – process of resolving allegations of fraud from inception to disposition. It involves not only financial analysis, but also taking statements, interviewing witnesses, rating reports, testifying to findings, and assisting in the detection and prevention of fraud. Fraud theory approach – the methodology used to investigate allegations of fraud. 1) Analyze available data, create hypothesis, test hypothesis, refine / amend hypothesis. Occupational fraud / abuse – the use of one’s occupation for personal enrichment to the deliberate misuse of miss application of the employing organizations resources or assets. Fraud – any crime for gain that uses deception as its principal modus operandi. Therefore 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, and damages as a result. Abuse – petty crimes committed against organizations, such as taking excessively long lunch hours or breaks, coming to work late or leaving early, using sick time when not sick, and pilfering supplies and products. Larceny – the unlawful taking and carrying away of property of another with the intent to convert it in one owns use. Fraud triangle – non-shareable financial problems, perceived opportunity, and the ability to rationalize conduct. Conversion – assuming someone else’s right to ownership. Sutherland – crime is learned. Cressey – fraud triangle. Albrecht – fraud scale (pressure, opportunity, integrity).
Chapter 2 Skimming-theft of cash prior to its entry in the accounting system. Sales skimming – skimming that involves the theft of sales receipts, as opposed to payments on accounts receivable. Sales skimming schemes leave the victim organization’s books in balance, because neither the sales transaction nor the stolen funds are ever recorded. Off book fraud – of fraud that occurs outside the financial system and therefore has no direct audit