FA1 Test 7&8 study guide PDF.pdf - Forensic Accounting...

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Forensic Accounting 1 - CH 7&8 Test Study Guide Know what the fraud investigation process is: - Involves systematically gathering and reviewing evidence for the purpose of documenting the presence absence of fraud. - They commence as a result of some indication that fraud may have occurred: anything from an anonymous tip to anomalous data in the accounting system. - The fraud investigator must assume that the matter under investigation will eventually conclude in civil or criminal courts. - Involves a series of four steps: - The engagement process - The evidence collection process - The reporting process - The loss recovery process Know the steps in the fraud theory approach: - Analyse data - Create hypothesis regarding a possible fraud - Test hypothesis - Refine and amend the hypothesis -or- Fraud theory is supported by the evidence The four types of evidence + examples: - Physical evidence (evidence that is tangible)
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- Document evidence (documents collected as part of the investigation and also those created by the forensic accountant - charts, graphs, stats) - Observation evidence (involves the use of senses to assess the propriety of the behaviour of persons and other activities such as business processes) - Interview evidence (Information gathered in an interview) An example of loss mitigation - A decision must be made whether it is necessary to immediately intervene to prevent the perpetrator from continuing with the fraud scheme.
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