Fraud Examination-Key Term

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Chapter 1| |
Association of Certified Fraud Examiners (ACFE)| An international organization of approximately 50,000 members based in Austin, Texas, dedicated to fighting fraud and white-collar crime.| Civil law| The body of law that provides remedies for violation of private rights—deals with rights and duties between individuals.| Criminal law| The branch of law that deals with offenses of a public nature or against society.| Customer fraud| Customers not paying for goods purchased, getting something for nothing, or deceiving organizations into giving them something they should not have.| Employee embezzlement| Employees deceiving their employers by taking company assets.| Evidential matter| The underlying data and all corroborating information available about a fraud.| Financial statement| Reports such as the balance sheet, income statement, and statement of cash flows that summarize the financial status and results of operations of a business entity.| Fraud| A generic term that embraces all the multifarious means that human ingenuity can devise, which are resorted to by one individual, to get an advantage over another by false representations. No definite and invariable rule can be laid down as a general proposition in defining fraud, as it includes surprise, trickery, cunning, and unfair ways by that another is cheated. The only boundaries defining it are those that limit human knavery.| Investment scam| Any fraud that is related to stocks, bonds, commodities, limited partnerships, real estate, or other types of investments such as the selling of fraudulent and worthless investments to unsuspecting investors.| Jurisdiction| The limit or territory over which an organization has authority.| Management fraud| Deception perpetrated by an organization’s top management through the manipulation of financial statement amounts or disclosures.| Miscellaneous fraud| Deception that doesn’t fall into any of the other five categories of fraud.| Net income| An overall measure of the performance of a company; equal to revenues minus expenses for a period.| Perpetrator| A person who has committed a fraud.|

Profit margin| Net income divided by total revenues; also known as return on sales, profit margin percentage, profit margin ratio, and operating performance ratio.| Revenue| Increases in a company’s resources from the sale of goods or services.| Statute| A law or regulation; a law enacted by the legislative branch of a government.| Vendor fraud| An overcharge for purchased goods, the shipment of inferior goods, or the nonshipment of goods even though payment is made.|

* Chapter 2
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Accounting system| An organization of policies and procedures for recording economic transactions.| Audit trail| Documents and records that can be used to trace transactions.| Coercive power强迫| The ability that one person (person A) has to punish another person (person B) if he or she does not comply with that person’s (person A’s) wishes.| Control environment| A set of characteristics that defines good management control features other than accounting policies and control activities; one element of the control system of a corporation identified in the COSO framework.| Control procedures or activities| Specific error-checking routines performed by company personnel; the five types of control activities identified by COSO are (1) segregation of duties, (2) proper authorizations, (3) physical controls, (4) independent checks, and (5) documents and records.| Documents and records| Documentary evidence of all transactions that create an audit trail.| Expert power| The ability of one person to influence another person based on special knowledge or expertise.| Independent checks| Periodically monitoring the work or activities of others.| Labeling| Teaching employees behaviors that are and are not appropriate within the organization.| Legitimate power| The ability of...
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