Chapter 3 - Fighting Fraud: An Overview

Question 1

How do organizations fight fraud?

Answer 1

1. Fraud prevention
2. early fraud detection
3. fraud investigation
4. legal action and/or resolution

Question 2

which method that organizations use to fight fraud is the most cost-effective?

Answer 2

fraud prevention

Question 3

Fraud Prevention involves 2 fundamental activities:

Answer 3

1. sustain a culture of honesty and high ethics
2. assess the risk for fraud, develop concrete responses to mitigate those risks, and eliminate the opportunity for fraud

Question 4

What are 3 primary ways that fraud is detected

Answer 4

1. by chance
   proactively:
2. whistleblower
3. data analysis/mining

Question 5

before you investigate fraud, you must have _______

Answer 5

predication

Question 6

definition of: predication

Answer 6

a set of circumstances that would lead a reasonable person to believe a fraud has occurred or will occur

Question 7

types of fraud evidence that can be accumulated

Answer 7

1. testimonial
2. documentary
3. physical
4. personal/observational

Question 8

what is documentary fraud evidence?

Answer 8

evidence gathered from paper, computers and other written or printed sources

Question 9

examples of documentary fraud evidence are…

Answer 9

• document examination
• data mining
• public records searches
• audits
• computer searches
• net worth calculations
• financial statement analysis
• corporate database
• Email servers

Question 10

data mining, net worth calculations and document examinations are examples of ___________ fraud evidence

Answer 10

documentary

Question 11

examples of physical fraud evidence are…

Answer 11

• fingerprints
• tire tracks
• weapons
• stolen goods
• ID numbers
• marks on stolen objects
• any tangible evidence

Question 12

fingerprints, stolen goods and ID numbers are examples of ___________ fraud evidence

Answer 12

physical

Question 13

Examples of personal observation fraud evidence…

Answer 13

• invigilation
• surveillance
• covert operations

Question 14

invigilation, surveillance and covert operations are examples of __________ fraud evidence

Answer 14

personal observation

Question 15

what are the 3 steps of fraud

Answer 15

1. the theft act
2. the concealment
3. the conversion

Question 16

Ethical maturity model. 4 steps

Answer 16

1. personal ethical understanding. learning right/wrong, honesty, personal integrity and respect for others
2. application of those ethics to business situations.
3. ethical courage- willingness to pay the price for ethical decisions
4. ethical leadership - helping others to be ethical by promoting ethical awareness and courage