This chapter presents the following content: Definition of fraud, types of fraud, the fraud triangle, overview of a financial statement fraud examination, business investigations, computer technology in fraud investigations,. | Forensic Accounting Research Chapter 10 Types of value added services Risk assessment of fraud and illegal acts Legal counsel asks you to investigate embezzlement scheme involving hidden assets Vendor kickback determination Fact-finding for alleged frauds involving bribery, wire fraud, securities fraud, etc. All of these involve forensic accounting or litigation support Fraud defined Intentional deception, simply lying, cheating, or stealing A generic term, embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or by suppression of truth. It includes surprise, trickery, cunning, dissembling, and any unfair way by which another is cheated. Fraud defined (contd.) Fraud includes the following elements: A misrepresentation of a material fact Known to be false Justifiably relied upon Resulting in a loss Types of frauds Fraudulent financial reporting (management fraud) Actions whereby management attempts to inflate reported earnings or other assets in order to deceive outsiders Overstating assets/revenues, price fixing, contract bidding fraud, understating expenses/liabilities Types of frauds (contd.) Misappropriation of assets (employee fraud) Actions of individuals whereby they misappropriate (steal) money or other property from their employers Embezzlement, theft of company property, kickbacks Types of fraud (contd.) Employee embezzlement – fraud in which employees steal company assets either directly – stealing cash or inventory –or indirectly – taking bribes or kickbacks Management fraud – deception by top management of an entity primarily through the manipulation of the financial statements in order to mislead users of those statements Investment scams – the sale of fraudulent and often worthless investments (telemarketing and Ponzi scheme type frauds) Types of fraud (contd.) Vendor fraud – fraud resulting from overcharging for goods purchased, shipment of . | Forensic Accounting Research Chapter 10 Types of value added services Risk assessment of fraud and illegal acts Legal counsel asks you to investigate embezzlement scheme involving hidden assets Vendor kickback determination Fact-finding for alleged frauds involving bribery, wire fraud, securities fraud, etc. All of these involve forensic accounting or litigation support Fraud defined Intentional deception, simply lying, cheating, or stealing A generic term, embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or by suppression of truth. It includes surprise, trickery, cunning, dissembling, and any unfair way by which another is cheated. Fraud defined (contd.) Fraud includes the following elements: A misrepresentation of a material fact Known to be false Justifiably relied upon Resulting in a loss Types of frauds Fraudulent financial reporting (management fraud) Actions whereby
