Fraud Week 1
Running head: Fraud Week 1
MBA 576 Fraud Management
Week 1 – Principles of Fraud Examination
Brenda Heinzen
Concordia University
As I develop in mind, body, and spirit, I pledge on my honor that I have not given, received, witnessed, nor have knowledge of unauthorized aid on this or any assignment. Brenda HeinzenWeek 1 – Fraud Basics
Chapter 1: Introduction
Chapter 2: Skimming
2012 Report to the Nations on Occupational Fraud and Abuse at ACFE.com
Questions
1. Of the three legs of the “Fraud Triangle”, which is the employer in a position to have the greatest impact on opportunity, pressure, or rationalization? Explain your answer.
Opportunity is the leg of the Fraud Triangle that an employer is in a position to have the greatest impact. Given the opportunity to abuse the trust the organization has entrusted an employee with along with the ability to do so with little risk of being caught greatly increases the risk to the employer. One of the best ways to eliminate opportunity is with separation of duties (SoD). One very common place where SoD is used in organizations is to separate the functions of Accounts Receivable from Account Payable. If an employee has access to only one of these areas the opportunity to commit fraud is greatly diminished as the likelihood of being found out is high.
2. Asset misappropriation accounts for the greatest number of cases of fraud in business, but financial statement fraud accounts for the greatest losses. Explain why this is so.
An organization’s assets can range in size from as small as a paperclip to as large as a tractor-trailer unit or larger and can number in the range of millions of items. Financial statements tell the story of an organization with regard to its stability and growth potential. Based on this, it is easy to reason that there can be many cases of assets misappropriation, just given the enormous number of assets within an organization. Generally speaking the greater number
MBA 576 Fraud Management
Week 1 – Principles of Fraud Examination
Brenda Heinzen
Concordia University
As I develop in mind, body, and spirit, I pledge on my honor that I have not given, received, witnessed, nor have knowledge of unauthorized aid on this or any assignment. Brenda HeinzenWeek 1 – Fraud Basics
Chapter 1: Introduction
Chapter 2: Skimming
2012 Report to the Nations on Occupational Fraud and Abuse at ACFE.com
Questions
1. Of the three legs of the “Fraud Triangle”, which is the employer in a position to have the greatest impact on opportunity, pressure, or rationalization? Explain your answer.
Opportunity is the leg of the Fraud Triangle that an employer is in a position to have the greatest impact. Given the opportunity to abuse the trust the organization has entrusted an employee with along with the ability to do so with little risk of being caught greatly increases the risk to the employer. One of the best ways to eliminate opportunity is with separation of duties (SoD). One very common place where SoD is used in organizations is to separate the functions of Accounts Receivable from Account Payable. If an employee has access to only one of these areas the opportunity to commit fraud is greatly diminished as the likelihood of being found out is high.
2. Asset misappropriation accounts for the greatest number of cases of fraud in business, but financial statement fraud accounts for the greatest losses. Explain why this is so.
An organization’s assets can range in size from as small as a paperclip to as large as a tractor-trailer unit or larger and can number in the range of millions of items. Financial statements tell the story of an organization with regard to its stability and growth potential. Based on this, it is easy to reason that there can be many cases of assets misappropriation, just given the enormous number of assets within an organization. Generally speaking the greater number