ch 1

Question 1

Fraud Examination

Answer 1

a process of resolving allegations of fraud from inception to dispositions. 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.

Question 2

Fraud theory approach

Answer 2

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

Question 3

occupational fraud and abuse

Answer 3

the use of ones occupation for personal enrichment through the deliberate misuse of misapplication of eht employing organizations resources or assets.

Question 4

Fraud

Answer 4

any crime for gain that uses Deception as its principal modas operandi. there are four legal elements that must be present 1 a material false statement 2 knowledge that the statement was false when it was uttered 3 reliance on the false statement by the victim and 4 damages as a result

Question 5

Abuse

Answer 5

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 or products

Question 6

Fiduciary relationship

Answer 6

in business the trusting relationship that the employee is expected to hold toward the employer requiring the employee scrupulous good faith to act in the employers legal best interest.

Question 7

Conversion

Answer 7

the unauthorized assumption of a right of ownership over the goods of another to the exclusion of the owners rights. when an employee steals company assets he is converting the use of them.

Question 8

Larceny

Answer 8

the unlawful taking and carrying away of property of another with the intent to convert it to ones own use.

Question 9

White collar crime

Answer 9

coined by edwin sutherland oringinally defined as criminal acts only of corporations and of individuals acting in their corp capacity BUT now used to define any financial or economic crime

Question 10

Fraud Triangle

Answer 10

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, and the ability to rationalize conduct

Question 11

Nonshareable Problem

Answer 11

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

Question 12

Rationalization

Answer 12

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

Question 13

Employee Deviance

Answer 13

conduct by employee that is detrimental to both employer and employee. such as goldbricking, work slowdowns, and industral sabotage

Question 14

Organizational Controls

Answer 14

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

Question 15

Social Controls

Answer 15

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