Fraud Examination

Chapter 1
The Nature of Fraud

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
To the Student
 With this chapter, you are embarking on an exciting journey of the
study of fraud. Many of you will find this course more interesting than
any other course you have taken before.

 Chapter 1 will provide an overview of fraud—what is fraud, how

serious is the problem, fraud-fighting careers, criminal and civil laws,
and other overview topics.

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Learning Objectives
 Recognize the seriousness and effects of fraud
 Define fraud
 Classify types of fraud
 Distinguish between criminal and civil fraud laws
 Identify fraud-fighting careers

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Seriousness of Fraud

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Seriousness of Fraud
Sources of Fraud Statistics
 Government Agencies
 Researchers
 Insurance Companies
 Fraud Victims
 Association of Certified Fraud Examiners (ACFE)

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Definition of Fraud
 Seven Specific Parts of Fraud
 A representation…
 About a material point,
 Which is false,
 And intentionally or recklessly so,
 Which is believed
 And acted upon by the victim
 To the victim’s damage

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Definition of Fraud
 Fraud is…  Fraud is not…
 intentional  taken by physical force
 to trick or deceive  a mistake or error
someone out of his/her  victimless
assets  insignificant because no
 theft one is hurt
 a crime  acceptable or justifiable

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Various Classifications
of Fraud
 There are many ways to classify the various types of
fraud, the most common way is to simply divide frauds into
those that are committed against organizations and those
that are committed on behalf of organizations

 Employee fraud
 Occupational fraud
 A third classification divides frauds according to victims

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Various Classifications
of Fraud

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Criminal and Civil Fraud
Laws
 When people commit fraud, they can be prosecuted
criminally and/or civilly.

 Criminal law is that branch of law that deals with offenses

of a public nature
 Civil law deals with the rights of individuals

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Fraud-fighting Careers

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license