CFE- Fraud Prevention
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| According to the normative perspective, why do people obey the law? | Because they feel that braking the law is morally wrong and that laws should be obeyed even when they do not agree with them
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| What is negative reinforcement | Withdrawing a negative stimulus in exchange for the desired response
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| What is punishment | Either a negative stimulus or withdrawing a positive stimulus when presented with undesired behavior
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| According to the instrumental perspective why do people obey the law | Because they fear punishment for noncompliance
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| What is the routine activities theory of crime causation | The theory that both the motivation to commit crime and the supply of offenders is constant and that the activities and circumstances of potential victims are determining factors in crime
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| What is the theory of differential association | People learn the values, attitudes, techniques & motives for criminal behavior by communicating/participating in intimate personal groups in a way that results in an excess of definitions favorable to violations of the law
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| What is the social control theory of crime causation | The stronger of a person's bond of affection for other law-abiding people is, the more likely the person is to consider that factor and to be deferred from committing a criminal act
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| The stronger of a person's bond of affection for other law-abiding people is, the more likely the person is to consider that factor and to be deferred from committing a criminal act | Punishment
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| What are the components of classical criminology | People have free will, criminal behavior is more attractive when games are estimated to be greater than losses, swift and severe penalties to crime are more likely to deter criminal behavior
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| What is the theory of anomie | Criminal behavior results from the discrepancy between what people are indoctrinated into desiring and the ability to achieve those desires
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| According to the differential reinforcement theory when his behavior reinforced | When positive rewards are gained (positive reinforcement), when punishment is avoided (negative reinforcement)
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| According to the differential reinforcement theory, when his behavior weekend | When punishment is presented (negative stimuli), when rewards are lost (negative punishment)
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| What is a white collar crime | Crime that involves the use of an individual's legitimate position of power, influence, or trust for the purpose of illegal gain
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| Most common organizational that environmental motivating factor for fraud in Albrecht study | Placing too much trust in Three approaches used to control corporate crime
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| Most common personal characteristic among fraudsters in Albrecht study | Living beyond one's means
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| How are most frosty checked it according to the ACFE report to the nations | By tip
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| What is organizational crime | Crime that is committed by businesses and the government
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| What is organizational crime | Crime that is committed by businesses and the government
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| Four categories of occupational crime | Crimes for the benefit of employing organization, crimes by officials through exercise of their state- based authority, crimes by professionals in the capacity as professionals, crimes by individuals as individuals
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| What is occupational crime | Crime that is committed by individuals in the course of their occupation
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| Three legs of a fraud triangle | Perceived non-sharable financial need (motivation of pressure) perceived opportunity, rationalization
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| Who is responsible for the hypothesis of the fraud triangle | Donald R. Cressey
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| Factors used in determining fines imposed under the Corporate Sentencing Guidelines | The seriousness of the offense, the organization's level of culpability
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| 4 types of remedies under the Corporate Sentencing Guidelines | Guidelines fines, restitution, remedial orders, probation
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| types of background checks for potential employees | past employment verification; criminal conviction checks; drug screening; reference checks; education and certification verification
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| factors that affect employees' ethical decisions | the law + other gov't regulations; industry + organizational ethical codes; social pressures; tension between personal standards and organizational needs
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| points to emphasize about a company reporting program | Fraud, waste and abuse occur in nearly all companies; such conduct costs the company jobs + profit; Company actively encourages any employee with info. to be able to come forward employees can provide good-faith info
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| More reporting points | anonymously + w/o fear of recrimination; there is an exact method for reporting an incident; report need not be made to one's immediate supervisor
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| mechanisms that can alleviate pressure to commit fraud | open-door management policies; fair + equitably applied personnel policies + procedures; measures to boost employee morale; employee support programs
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| components of a comprehensive ethics program | us on ethical leadership; vision statement; values statement; code of ethics; designated ethics official; ethics task force or committee; ethics communication strategy;
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| more components | ethics training, ethics help and fraud reporting telephone line; ethical behavior behavior rewards and sanctions
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| what is fraud risk? | the vulnerability that an organization hast to those capable of overcoming all 3 elements of the fraud triangle
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| what is inherent fraud risk | risks present before management action
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| what is residual fraud risk | risks remaining after management action
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| what is the objective of anti-fraud controls | to reduce the residual fraud risk to a level that is significantly smaller than the inherent fraud risk
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| what factors influence an organizations"s fraud risk | nature of the business; environment in which it operates; effectiveness of its internal controls; ethics and values of the company
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| 4 approaches management can use to respond to residual fraud risks | avoid the risk; transfer the risk
mitigate the risk; assume the risk
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| what does it mean to avoid fraud risk | to eliminate an asset or exit an activity that is the source of the risk
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| what does it mean to transfer fraud risk | to purchase insurance or a fidelity bond so that the risk of loss is covered by the insurance company
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| what does it mean to mitigate fraud risk | to implement countermeasures against potential fraud, such as prevention and detection controls
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| what does it mean to assume fraud risk | to accept the risk other than implement any responsive measures
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| what are preventive controls | manual or automated processes that stop something bad from happening before it occurs
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| what are detective controls | controls designed to identify something bad that has already occurred
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| what is fraud risk assessment | a process aimed at proactively identifying and addressing an organization's vulnerabilities to internal and external fraud
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| fraud risks related to fraudulent financial reporting | inappropriately reported revenues, expenses or both; inappropriately reflected balance sheet amounts, including reserves; inappropriately improved or masked disclosures
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| fraud risks related to asset misappropriations | misappropriation of tangible assets; misappropriation of intangible assets; misappropriation of proprietary business opportunities
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| fraud risks related to corruption | payment of bribes or illegal gratuities to companies, private individuals or public officials; receipt of bribes, kickbacks, or illegal gratuities; aiding + abetting of fraud by outside parties, such as customers or vendors
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| fraud risks related to external fraud | fraud committed: by customers (e.g. fraudulent customer payments), vendors (overfilling or collusion, competitors (corporate espionage), unrelated third parties (e.g. hacking).
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| what is risk management | identification, prioritization, treatment and monitoring of risks that threaten an organizations' ability to provide value to its stakeholders
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| 8 components of COSO's Enterprise Risk Management - Integrated Framework | internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, monitoring
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| who is responsible for managing fraud risk? | Personnel at all levels of the organization
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| Board of directors' responsibilities for fraud risk management |
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| Audit committee's responsibilities for fraud risk management | receive regular reports on status of fraud; meet regularly with key internal parties to discuss fraud risks; understand how audit strategies address fraud risk;
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| More Audit respons. | demonstrate a commitment to fraud risk management to the external auditors; discuss known or suspected frauds with external auditors
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| Management's responsibilities for fraud risk management | be familiar with org's fraud risks; ensure adequacy of internal controls; set the tone at the top; clearly communicate that fraud is not tolerated; investigate any fraud allegations;
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| More management respons | punish perpetrators of fraud; remediate weaknesses that allowed fraud to occur
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| staff's responsibilities for fraud risk management | have a basic understanding of fraud and its red flags; read/understand any anti-fraud policies; adhere to internal control system, as applicable; report suspicions of fraud; cooperate in investigations
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| 3 objectives of a fraud risk management program | Prevent fraud, detect fraud, respond to identified fraud
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| what is fraud prevention | Proactively identifying and assessing fraud risks and taking steps to identify those risks
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| what is fraud detection | identification of fraud occurrences as asap after they begin in order to limit the damage done
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| what is fraud response | responding to suspected fraud by: investigating allegation; punishing the perpetrator; remediating control weaknesses; rebuilding stakeholder confidence.
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| 10 components of an effective fraud risk management program | commitment, fraud awareness, affirmation process, conflict disclosure, reporting procedures + whistleblower protection, investigation process, corrective action, process evaluation + improvement; continuous monitoring
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| 3 factors that must be balanced when determining objectives of a fraud risk management program | investment in anti-fraud controls; prevent of material frauds, management's risk appetite
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| what is risk appetite? | Amount of risk those charged with governance are willing to accept
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| what is ethics? | The appropriateness of a decision in light of morality
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| what is morality | Underlying codes of right and wrong
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| what is legality | Lawfulness by conformity to a legal statute
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| lowest level of reference for an ethical decision | The law
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| What is moral philosophy | The branch of philosophy the involves systematizing, championing, and advocating concepts of right and wrong
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| purpose of a professional code of ethical conduct | Serves as ethical reference + benchmark; explicitly defines some criteria for conduct, providing direct solutions that might not be available from gen ethics theories; provides means of facilitating enforcement of standards of conduct
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| what is reflective choice as it relates to ethics | Process whereby an individual identifies a problem, analyzes the situation, and takes action
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| what is professionalism as it relates to ethics | The standing, practice, methods, character, qualities, or typical features of a professional or professional organization
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| 5 principal characteristics that help differentiate professional fields from other vocations | Body of specialized knowledge; admission to profession governed by qualifications; recognition and acceptance by society of professional status; adherence to standards of conduct of the profession;
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| more characteristics | an organization devoted to the profession's advancement
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| what is a conflict of interest in terms of a fraud investigation | when a fraud examiner's ability to objectively evaluate and present an issue for a client is impaired by a relationship with parties to the fraud examination
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| How is integrity defined for a Certified Fraud Examiner | A personal characteristic that includes honesty; trustworthiness; confidentiality; subordination of desires for personal gain to interests of clients, employers, and the public; a well developed sense of moral responsibility
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| For the purpose of a fraud examination, what is confidential information? | Any and all information obtained in the course of an engagement, whether it be from the company or client for whom the work is performed or from any other source consulted during the work
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| what is privileged information | Information that cannot be demanded even by a court; it is protected by law from evidence
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| For purpose of a fraud examination, when is information considered material? |
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| For the purpose of a fraud examination, what is objectivity? | Ability to conduct examination without being influenced by one's own personal feelings or the feelings and motives of others
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| For purpose of a fraud examination, what is independence? | Impartiality and fairness in conducting examinations and in reaching resulting conclusions and judgments
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| for purpose of fraud examination , what is due professional care? | Ensuring there is sufficient predication from beginning a fraud examination; conducting examinations with diligence; observing all applicable laws and regulations; and using appropriate investigation techniques
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| 8 requirements of the CFE Code of Professional Ethics? | Professionalism +diligence in performance of duties; avoidance of illegal or unethical conduct and conflicts of interest; integrity and professional competence in performance of assignments; compliance with laws and
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| more requirements | and provision of truthful, unbiased testimony; evidence for all opinions rendered and avoidance of opinions re: guilt or innocence; protection of confidential info; reporting all material matters;
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| more requirements | continual improvement of professional competence and effectiveness.
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Created by:
Monatlo