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 fraudwhat 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 victims 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