FRAUD EXAMINATION ALBRECHT, ALBRECHT, & ALBRECHT. WHO COMMITS FRAUD AND WHY. CHAPTER 2. Learning Objectives. Recognize who commits fraud. Understand why people commit fraud. Become familiar with the fraud triangle. Understand how pressure contributes to fraud.
FRAUD EXAMINATIONALBRECHT, ALBRECHT, & ALBRECHT
WHO COMMITS FRAUD AND WHY
Other Property Offenders
Just as a fire can be prevented or extinguished by removing one the three elements in the fire triangle, so to can fraud be prevented by removing one of the three elements of fraud from the fraud triangle.
Look for who has the three elements of the fraud triangle necessary to commit fraud, then put controls in place to prevent fraud.
Comment on the Lengths People Will Go to Support Their Vices.
Specific error-checking routines performed by company personnel
A set of characteristics that defines good management control features other than accounting policies and procedures
Control Procedures or Activities
Policies and procedures for recording economic transactions in an orderly manner
30% Situationally Honest
40% Honest All the Time
Internal Audit Detects 20% of Detected Frauds
It provides a good audit trail…
which allows frauds to be detected.
Individuals commit fraud to conceal personal expenditures with business assets and evade paying taxes.
Internal Control Structure