Term
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Definition
| the deliberate destruction or harm to a system |
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Term
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Definition
deliberate deception, trickery, or cheating intended to gain an advantage. Legally, for an act to be fraudulent there must be:
- A fasle statement, representation, or disclosure
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A material fact, which is something that induces a person to act
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an intent to deceive
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A justifiable reliance; person relies on the misrepresentation to take an action
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An injury or loss suffered by the victim
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Term
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Definition
| data a web site stores on your computer to identify the web site to your computer so that you do not have to log on each time you visit the site |
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Term
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Definition
| a term often used to refer to a fraud perpetrator |
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Term
| Three types of occupational fraud |
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Definition
1) misappropriation of Assets
2) fraudulent financial reporting
3) corruption |
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Term
Misappropriation of Assets
(significant contributing factors) |
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Definition
| the theft of company assets. the most significant contributing factor in most misappropriations is the absence of internal controls and/or the failure to enfore existing internal controls |
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Term
| Fraudulent Financial Reporting |
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Definition
intentional or reckless conduct, whether by act or omission, that results in materially misleading financial statements
- the company is the direct beneficiary
- the perpetrators are typically indirect beneficiaries
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Term
| SAS No. 99: The Auditor's Responsibility or Detect Fraud |
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Definition
-SAS No. 82, adopted in 1997
-changed to SAS No. 99 and became effective Dec. 2002
-requires auditors to:
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understand fraud
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discuss the risks of material fraudulent misstatements
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obtain information
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identify, assess, and respond to risks
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evaluate the results of their audit tests
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document and communicate findings
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incorporate a technology focus
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Term
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Definition
- also known as "peculation"
- embezzlement is a specific type of fraud
- refers to a type of financial fraud that has been committed with respect to "funds that have been entrusted to one for care or management". |
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Term
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Definition
| facilitating embezzlement of funds through devices, such as fake invoices or forged checks |
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Term
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Definition
| stealing cash before it enters an organization's books |
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Term
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Definition
| stealing cash after it has been recorded in the organization's books |
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Term
| Common approaches to "cooking the books" |
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Definition
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recording fictitious revenues
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recording revenues prematurely
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recording expenses in later periods
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overstating inventories or fixed assets
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concealing losses and liabilites
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Term
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Definition
| three conditions are present when fraud occurs: a pressure, an opportunity, and a rationalization |
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Term
A Pressure
(types of pressures) |
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Definition
a person's incentive or motivation for committing fraud:
- Financial pressures
- emotional pressures
- lifestyle pressures
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Term
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Definition
the condition or situation that allows a person or organization to do three things:
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Commit the fraud
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Conceal the fraud
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Convert the theft or misrepresentation to personal gain
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Term
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Definition
| allows perpetrators to justify their illegal behavior |
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Term
| In general, who commits fraud and how do fraudsters differ from other criminals and the general population? |
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Definition
| Most fraudsters have no previous criminal record and are perceived as honest, valued, and respected members of their communities. Unlike violent criminals, fraudsters and the general population have very similar personality types. |
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Term
| Four actions to reduce the possibility of fraudulent financial reporting, recommended by the Treadway Commission |
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Definition
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establish an organization environment that contributes to the integrity of the financial reporting process
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identify and understand the factors that lead to fraudulent financial reporting
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assess the risk of fraudulent financial reporting withing the company
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design and implement internal controls to provide reasonable assurance that fraudulent financial reporting is prevented
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Term
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Definition
| the simplest and most common way to commit a computer fraud is to alter to falsify computer input |
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Term
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Definition
| unauthorized system use, including the theft of computer time and services |
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Term
| Computer Instructions Fraud |
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Definition
| includes tampering with company software, copying software illegally, using software in an unauthorized manner, and developing software to carry out an unauthorized activity |
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Term
| Computer Fraud and Abuse Act |
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Definition
- passed in 1984
- governs cases with compelling federal interest, where computers of the federal government or certain financial institutions are involved, where the crime itself is interstate or foreign in nature
- amended by the Patriot Act and the Identity Theft Enforcement and Restitution Act |
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Term
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Definition
| illegally using, copying, browsing, searching, or harming company data constitutes data fraud |
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Term
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Definition
| stealing, copying, or misusing displayed or printed output, which has usually not been properly safeguarded |
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Term
Which of the following is a fraud in which later payments on account are used to pay off earlier payments that were stolen?
a) lapping
b) kiting
c) Ponzi scheme
d) salami technique |
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Definition
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Term
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Definition
| the use of new payments received to pay off earlier payments that were stolen |
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Term
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Definition
| cash is created using the lag between the time a check is deposited and the time it clears the bank |
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Term
Which type of fraud is associated with 50% of all auditor lawsuits?
a) kiting
b) fraudulent financial reporting
c) Ponzi schemes
d) lapping |
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Definition
b) fraudulent financial reporting |
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Term
Which of the following statements if FALSE?
a) the psychological profiles of white-collar criminals differ from those of violent ciminals
b) the psychological profiles of white-collar criminals are significantly different from those of the general public
c) There is little to no difference between computer fraud perpetrators and other types of white-collar criminals
d) Computer fraud perpetrators often do not view themselves as criminals |
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Definition
b) the psychological profiles of white-collar criminals are significantly different from those of the general public
FALSE |
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Term
Which of the following conditions is/are usually necessary for a fraud to occur? (select all correct answers)
a) pressure
b) opportunity
c) explanation
d) rationalization |
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Definition
| (a,b,d) Pressure, Opportunity, Rationalization |
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Term
Which of the following is NOT an example of computer fraud?
a) theft of money by altering computer records
b) obtaining information illegally using a computer
c) failure to perform preventitive maintencance on a computer
d) unauthorized modification of a software program |
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Definition
| c) failure to perform preventitive maintencance on a computer |
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Term
Which of the following causes the majority of computer security problems?
a) human errors
b) software errors
c) natural disasters
d) power outages |
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Definition
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Term
Which of the following is NOT one of the responsibilities of auditors in detecting fraud according to SAS No. 99?
a) evaluate the results of their audit tests
b) incorporate a technology focus
c) discuss the risks of material fraudulent misstatements
d) catch the perpetrators in the act of committing the fraud |
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Definition
d) catch the perpetrators in the act of committing the fraud |
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Term
Which of the following control procedures is most likely to deter lapping?
a) encryption
b) continual update of the access control matrix
c) background check on employees
d) periodic rotation of duties |
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Definition
| d) periodic rotation of duties |
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Term
Which of the following is the most important, basic, and effective control to deter fraud?
a) enforced vacations
b) logical access control
c) segregation of duties
d) virus protection controls |
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Definition
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Term
Once fraud has occurred, which of the following will reduce fraud losses? (Select all correct answers)
a) insurance
b) regular backup or data and programs
c) contingency plan
d) segregation of duties |
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Definition
| (a,b,c) insurance, regular backups, contingency plan |
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