Corporate Fraud and Internal Control + Software Demo: A Framework for Prevention

CHAPTER ONE

Nature of Fraud

Fraud is like cancer. Most of us know someone who has it. We know people who will eventually have it. It has become common but we can take steps to protect ourselves through healthy choices and regular checkups using the latest tools and technology. But if people ignore the problem and live dangerously, then there’s a much greater chance of becoming a victim.

—Toby Bishop, CEO, Association of Certified Fraud Examiners

After studying this chapter, you should be able to:

• Briefly outline the definitions and concepts underlying fraud and irregularities
• Describe the basic types of fraud
• Understand the profiles and motivators of fraud
• Define the responsibilities for fraud detection and prevention

More and more incidents of private and public fraud are being reported daily in the media, and increasingly prosecutions for this offense are being conducted in the various courts. This chapter examines the phenomenon in order to obtain a full appreciation of what exactly fraud is.

FRAUD AND IRREGULARITIES: DEFINITIONS AND CONCEPTS

Throughout history, the development of negotiable instruments, from cowrie shells to plastic cards, have led to the creation of a set of rules and conventions for trade and the promotion of smooth and orderly commercial interactions among individuals and countries. The breaking of these rules and conventions helps white-collar criminals ...