Some Examples of what the Term “Fraud” Actually Includes

We have already established the broad parameters of the subject: fraud is both a criminal and a civil offence in most jurisdictions and it represents a significant business risk to all organisations in the 21st century in terms of potential damage to their profits and their reputation. I like to spend some time early on with my delegates on training courses discussing a number of the key components of fraud. This is not to try to establish any sort of alternative typology to that of the ACFE but rather to build upon it and to establish some important points of principle and guidance up front. There are five aspects of fraud that I use for these purposes as follows:

  • The abuse of systems and control procedures;
  • The abuse of working practices;
  • Financial engineering;
  • Corruption; and
  • Collusion.

Each is discussed in turn below.

1. Fraud as Abuse of Systems and Control Procedures

Every fraud represents an abuse of an organisation's systems and internal controls. This is a fairly obvious and self-evident statement yet it is important to emphasise the point at the outset. Controls and procedures are established to give assurance to the board and executives in many areas but their overarching purpose is to manage the various risks that every organisation faces. Controls matter and they should always be implemented and carried out efficiently by managers and staff at all levels within an organisation. Inconsistent application of internal ...

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