FRAUD EXAMINATION ALBRECHT, ALBRECHT,

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FRAUD EXAMINATIONALBRECHT, ALBRECHT, ALBRECHT

• THE NATURE OF FRAUD

• CHAPTER 1

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Learning Objectives

• Understand the seriousness of the fraud problem
  and how it affects individuals, consumers and
  organizations
• Define fraud
• Classify fraud into various types
• Understand how expensive fraud is to a company,
  investors, and a nation

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Learning Objectives

• Distinguish between criminal and civil fraud laws
  and how they relate to fraud.
• Be familiar with types of fraud-fighting careers
  today.

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Describe the Seriousness of Fraud.
How is the magnitude perceived to be changing?
Size and Dollars
Why is this difficult to know for sure?
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List Four Sources for Knowing How Much Fraud is
Occurring.

• Government Agencies
• FBI
• FDIC
• IRS
• Researchers
• Insurance Companies
• Victims of Fraud

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What are the Estimated Costs and Impacts of Fraud?

• 2000 400 Billion 2002 600 Billion or 4,500
  per employee
• 9.00 per day per employee
• 6 of revenue lost
• 6 cents on every revenue dollar stolen
• This works out to just less than 1/16th

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Explain How 1 in Fraud Represents 1 Lost
Profits.
Profits
Fraud
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What are the Seven Elements of Fraud?
1. A Representation
2. About a Material Point
3. Which is False
4. And Intentionally or Recklessly so
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What are the Seven Elements of Fraud?
5. Which is Believed
6. And Acted Upon by the Victim
7. To the Victim's Damage
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Define FraudWhat it is and What it isnt.

• What it is
• Intentional
• Trick or Deceive someone out of their assets
• Theft
• A crime

• What it isnt
• Taken by physical force
• A mistake or error
• Victimless
• Insignificant because no one got hurt
• Acceptable or Justifiable

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Why Are We so Often Conned?
TRUSTING
GREED
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Classify Frauds and Give an Example of Each.

• Fraud against an organization
• Fraud on behalf of or for an organization

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List Keys to Occupational Fraud and Define.

• Clandestine
• Violates employees fiduciary duties
• Benefits employee financially
• Costs the organization assets, revenues, and/or
  reserves

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Complete this Chart.
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Differentiate between Direct and Indirect
Embezzlement.

• Management fraud Investment fraud
• What is the key phrase to keep in mind about
  investment scams?
• If it sounds too good to be true it most likely
  isnt true
• There is a sucker born every minute
• P.T. Barnum

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What Are the Two Types of Vendor Fraud? Discuss.

• By vendors alone
• Collusion between vendor buyers
• Define Collusion

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Explain Customer Fraud.

• Getting something for nothing
• Not paying for goods purchased
• Deceiving an organization into providing goods
  and/or services one should not have

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Match Terms to Definitions.
Employee Embezzlement
Association of Certified Fraud Examiners
Employees taking employers assets
Management fraud
Overcharge for goods, or ship inferior goods
Investment scams
Selling worthless investments to unsuspecting
investors
Vendor fraud
Manipulation of financial statements by management
Customer fraud
Getting something for nothing, not paying for
goods services
ACFE
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Differentiate between Criminal and Civil
Responses to Fraud.
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What Skills Are Needed to be a Fraud Fighter?

• Analytical Skills to be able to examine the
  data for the symptoms of fraud
• Communication Skills Interviewing witnesses and
  suspects, communicating findings to witnesses,
  courts and others
• Technology Skills the ability to proactively
  search for fraud with computer programs

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Some Additional Skills that May Prove Helpful

• Some Understanding of Accounting and Business
  Fraud is done in business and efforts are usually
  made to hide the conduct in business records
• Knowledge of Civil and Criminal Law, Criminology,
  Privacy Issues, Employee Rights, Fraud Statutes
  and Other Legal Fraud-Related Issues
• The Ability to Speak and Write in a Foreign
  Language.
• A Knowledge of Human Behavior

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Employment Opportunities