Chapter 1 Notes

Chapter 1 Notes - Chapter 1 Fraud Examination Methodology...

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Chapter 1 Fraud Examination Methodology 1. Prediction a. The totality of circumstances that would lead a reasonable, professionally trained, and prudent individual to believe a fraud has occurred/is occurring/will occur. 2. Fraud Theory Approach a. Analyze available data i. Look at how contracts are awarded and at the distribution of contracts among suppliers b. Create a hypothesis i. Created to focus your efforts and is invariable a “worst-case” scenario for any type of scheme c. Test the hypothesis i. Develop a “what-if” scenario and gather evidence to either prove/disprove the proposition d. Refine and amend the hypothesis i. If the fact don’t fit a particular scenario, refine and retest the hypothesis and continue to work towards an acceptable conclusion 3. Tools in Fraud Examinations a. Examiner must be skilled in the examination of financial statements, books, records, etc… b. The interview: process of obtaining relevant information from those who know it c. Observation: a means of watching behavior of individuals for signs of wealth, or specific offences. Defining Occupational Fraud and Abuse The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organizations resources or assets 1. Defining Fraud: the following must be present i. A material false statement ii. Knowledge that the statement was false when it was uttered iii. Reliance on the false statement by the victim iv. Damages resulting from the victim’s reliance on the false statement a. Larceny – the felonious stealing, taking and carrying, leading, riding or driving away with another’s personal property with the intent to concert it or to deprive the owner thereof.
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b. To prove:
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This note was uploaded on 04/18/2008 for the course ATG 226 taught by Professor Johnsons during the Spring '08 term at Bradley.

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Chapter 1 Notes - Chapter 1 Fraud Examination Methodology...

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