Chapter 1: The Nature of Fraud Flashcards
How to find Profit Margin? (PM)
PM = Net Income / Gross Profit
How to find the Additional Revenue needed to recover from fraud?
Loss from Fraud / PM = Revenue needed
What are the three ways to classify fraud?
Whether the fraud was committed on behalf of the company or was committed against the company
Type of occupational fraud: Asset Misappropriation, Corruption, and Fraudulent Financial Statements.
Who the victim was: company is the victim, shareholders are the victims, unwary individuals are the victims, and the miscellaneous victims.
What is the burden of proof in criminal law?
“Beyond a reasonable doubt”
All 12 jurors need to vote unanimously.
What is the burden of proof in civil law?
“Preponderance of evidence.”
the jurors don’t need to vote unanimously and there can be less than 12 jurors.
perpetrators
someone who commits a fraud
jurisdictions
an area of legal responsibility
victims
someone who is the target of a fraud
association of certified fraud examiners (ACFE)
the worlds largest anti-fraud organization
net income
an entity’s income minus expenses
revenue
income
profit margin
how much out of every dollar a company actually keeps in earnings
fraud
tricking someone out of their assets.
financial statement
a prescribed financial report that provides meaningful disclosures of where a company has been, where it is currently or where it is going.
miscellaneous fraud
fraud that doesn’t fall into one of three specific categories and isn’t necessarily for financial gain
employee embezzlement
employees deceive employers by taking company assets
vendor fraud
an overcharge for purchased goods, the shipment of inferior goods, or the nonshipment of goods even though payment is made.
customer fraud
customers do not pay for goods purchased, they pay too little, or they get something for nothing.
management fraud
top management’s deceptive manipulation of financial statements.
investment scams
fraudulent and usually worthless investments are sold to unsuspecting investors.
evidential matter
the underlying data and all corroborating information available in a case.
criminal law
laws that deal with offenses of a public nature and are generally considered to be offenses against society.
statute
a law that prohibits some type of activity.
civil law
the body of law that provides remedies for violations of private (individual) rights.
