Quiz1_Review Flashcards
What kind of checks did Alan Salah deposit…
counterfeit cashier’s checks
How do we know the checks were counterfeit…?
the check number had been altered
Dr. Gallentine was committing fraud by altering this…
patient documentation
What kind of statements were obtained from the witnesses in the Dr. Gallentine case…?
signed, sworn statements
What was one of the lessons learned from “Down The Rabbit Hole….?
don’t be afraid to innovate
What is a Ponzi Scheme….?
a scheme of fraud where new investors pay older investors or the fraudster but there is no real investment
One of the first mentions of a Ponzi scheme in history was…!
Charles Dicken’s books or Sarah Howe
In terms of Ponzi schemes – if it looks too good to be true…
then it is too good to be true
What is one of the four good sources of fraud information…
government sources, researches, insurance companies, victims
A Ponzi scheme is in what classification of fraud…?
investment fraud
What is the “theft diagram”?
theft act, conversion, concealment
What was the main provision of the SOX Act…
whistle-blower programs
What theory says that people are less likely to choose crime if they had strong social bonds, and that people tend to unavoidably learn things they see or experience in a “hands on” way…
Social Learning Theory
What does the “slippery slope effect” say…
individuals more readily justify small indiscretions which tends to justify bigger ones
What was the purpose of the story of the tree….
example of creating a positive work environment
What is one good way to prevent crime…
establishing good internal control
What should the tone be set to prevent fraud in an organization…
the tone at the top
What is a system to help employees with life issues that might impact their performance…
Employee Assistance Program
Organizations should develop what kind of approach to fraud prevention…
comprehensive
In terms of deterring fraud in a company, what expectation must be created…
an expectation of punishment
This theory indicates that criminals learn of possibilities of crime, or seeks them out, as part of their daily actions…
Routine Activity Theory
Routine Activity Theory (Elements of a crime)
- A motivated offender
- A suitable victim
- The absence of a capable guardian…
What size of a company is fraud most prevalent in…
small to middle
What is a purpose of a civil action against an individual…?”
obtain a financial recovery
What was the origin of the “Pygmalion Effect”…
a sculptor made a statue so beautiful he fell in love with i
What type of font is required…
Times New Roman
What is the line spacing in A.P.A. style?…
double-spacing
How many spaces is every line in a reference indented after the first line…?
five spaces
What must be contained in the title block of the cover page…?
title of paper, name of author, and “area of study
How is the “Running Head” supposed to look like…?
Running Head: TITLE OF YOUR PAPER
Fraud involving misstatements in the balance sheet, income statement, and the statement of cash flows is called…?
financial statement fraud
The type of power wherein the fraudster influences another person because of expertise or knowledge…?
expert power
Fraud as it pertains to vendor fraud involving collusion is called…?
indirect fraud
Ways that perpetrators of fraud spend or utilize stolen assets are…?
conversion
In a civil case the prosecution must prove the case beyond a…?
preponderance of the evidence
What is the total percentage of organizational assets lost to fraud?
5%
Biological Factors
Any biological condition or situation which diverts an individual from developing from a societal norm. (MENTAL ILLNESS)
Situational Factors
Any current condition or situation which diverts and individual from developing from a societal norm.
Situational Factors
family and/or friends/associates
poverty, education, parenting practices, and family structure
poor communication skills and weak family bonds
Bankruptcy, desire for profitability, desire to demonstrate a company’s turnaround
Social Exchange Theory
Cost and benefit analysis between two parties to determine risks and benefits
Routine activity theory (3 parts of it)
absence of guardian, motivated offender, suitable victim
Sigmund Freud
“The Father of Psychoanalysis”
Cesare Lombroso
“Father of Criminology”
Travis Hirschi
“The Father of the Social Control Theory”
The fraud triangle
pressure, opportunity, rationalization
Seven Specific Parts of Fraud
a representation, about a material point, which is false, and intentionally or recklessly so, which is believed, and acted upon by the victim, to the victim’s damage
Two types of entities that commit fraud
Committed against an organization or on behalf of an organization
Committed against and individual or by individual(s)
Fraud classification according to victims:
Company or Organization as victim
- Employee embezzlement
- Vendor fraud
- Customer fraud
Shareholders or debt-holders as victims
-Management fraud
Unwary individuals as victims
-Investments and other consumer fraud
6 Main types of fraud
Occupational Fraud
Employee Embezzlement
Vendor Fraud
Customer Fraud
Management Fraud
Investments and Other Consumer Fraud
Four main pressures to commit fraud
Financial pressures
Vices
Work-related pressures
Other pressures
Six major factors that increase fraud opportunity
- Lack of controls
- Inability to judge performance quality
- Failure to discipline fraudsters
- Lack of access to information
- Ignorance, apathy and incapacity
- Lack of audit trail
Controls to Prevent / Detect Fraud (CONTROL ENVIRONMENT)
1) Management’s Role and Example
2) Management Communication
3) Appropriate Hiring
4) Clear Organizational Structure
5) Effective Internal Audit Department
Controls to Prevent / Detect Fraud (ACCOUNTING SYSTEM)
- Valid
- Properly authorized
- Complete
- Properly classified
- Reported in the proper period
- Properly valued
- Summarized correctly
Controls to Prevent / Detect Fraud (CONTROL ACTIVITIES)
- Segregation of duties, or dual custody
- System of authorizations
- Independent checks
- Physical safeguards
- Documentation and records
How Organizations Fight Fraud
- prevention
- etection
- investigation
- Follow-up legal action
Creating a Positive Work Environment:
Fraud occurs less frequently when employees have
1) Positive feelings about an organization
2) A sense of ownership in the organization
Create a culture of honesty, openness, and assistance by…
- Hiring honest people and providing fraud awareness training
- Creating a positive work environment
- Providing an employee assistance program (EAP) that helps employees deal with personal pressures
How to create a positive work environment?
- Setting expectations about honesty
- Having positive personnel and operating procedures.
- Having open-door or easy access policies
Five ways to eliminate fraud opportunities:
- Have good internal controls
- Discourage collusion
- Monitor employees and provide a whistle-blowing system
- Create an expectation of punishment
- Conduct proactive auditing
Good fraud auditing involves four steps:
- Identify fraud risk exposures
- Identify the fraud symptoms of each exposure
- Build audit programs to proactively look for symptoms and exposures
- Investigate fraud symptoms identified
