Fraud Examination Chapters 1-18 for Final Exam

Perpetrators - ANSWER-persons who commit a fraud Jurisdiction - ANSWER-the limit or territory over which an organization has authority Victims - ANSWER-a person or organization deceived by the perpetrator Association of Certified Fraud Examiners (ACFE) - ANSWER-the world's largest anti-fraud organization that regularly conducts one of the most comprehensive fraud studies in the United States Net Income - ANSWER-an overall measure of the performance of a company; equal to revenues minus expenses for a period Revenue - ANSWER-increases in a company's resources from the sale of goods or services Profit Margin - ANSWER-net income divided by total revenues; also known as return on sales, profit margin percentage, profit margin ration, and operating performance ratio Fraud - ANSWER-all of the multifarious means which humans ingenuity can devise, which are resorted to by one individual, to get an advantage over another by false representations Financial Statement - ANSWER-reports such as the balance sheet, income statement, and statement of cash flows that summarize the financial status and results of operations of a business entity Miscellaneous Fraud - ANSWER-a fraud that may have been committed for reasons other than financial gain and does not include employee embezzlement, vendor fraud, customer fraud, management fraud, investment scams, and other consumer frauds. Employee Embezzlement - ANSWER-the most common type of occupational fraud, where employees deceive their employers by taking company assets. It can be either direct or indirect. Vendor Fraud - ANSWER-is extremely common in the United States, and comes in 2 forms: (1) fraud perpetrated by vendors acting alone and (2) fraud perpetrated by through collusion between buyers and vendors Customer Fraud - ANSWER-occurs when customers either do not pay for goods purchased, they pay too little, or they get something for nothing Management Fraud - ANSWER-Involves top management's deceptive manipulation of financial statements Investment Scams - ANSWER-occur when fraudulent and usually worthless investments are sold to unsuspecting investors Evidential Matter - ANSWER-the underlying data and all corroborating information available about a fraud Criminal Law - ANSWER-the branch of law that deals with offenses of a public nature; generally offenses against society as a whole Statute - ANSWER-a law or regulation; a law enacted by the legislative branch of a government Civil Law - ANSWER-the body of law that provides remedies for violations of private rights. It deals with rights of individuals (T/F) All frauds that are detected by organizations are made public - ANSWER-False (T/F) Perpetrators use trickery, confidence, and deception to commit fraud. - ANSWER-True (T/F) One of the most common responses to fraud is disbelief by those around the fraud - ANSWER-True (T/F) Manufacturing companies with a profit margin of 10% must usually generate about 10 times as much revenue as the dollar amount of the fraud in order to restore their net income. - ANSWER-True (T/F) Fraud involves using physical force to take something from someone. - ANSWER-False, that is describing robbery (T/F) Identity theft is an example of employee embezzlement - ANSWER-False (T/F) When perpetrators are criminally convicted of fraud, they often serve jail sentences and/or pay fines. - ANSWER-True (T/F) Management fraud is deception perpetrated by an organization's top management - ANSWER-True (T/F) A Ponzi scheme is considered to be a type of investment scam - ANSWER-True (T/F) Most people agree that fraud-related careers will be in demand in the future - ANSWER-True