Fraud Final Exam (Test #3)

Front 1

Mischaracterized expense scheme

Back 1

An attempt to obtain reimbursement for personal expenses by claiming they are business related.

Front 2

Overstated expense reimbursement

Back 2

Schemes in which business-related expenses are inflated on an expense report so that the perpetrator is reimbursed for an amount greater than the actual expense.

Front 3

Overpurchasing

Back 3

A method of overstating business expenses in which a fraudster buys two or more business expense items at different prices (such as airline tickets). The perpetrator returns the more expensive item for a refund but he claims reimbursement for this item. As a result, he is reimbursed for more than his actual expenses.

Front 4

Fictitious expense reimbursement schemes

Back 4

A scheme in which an employee seeks reimbursement for wholly nonexistent items or expenses.

Front 5

Multiple reimbursement schemes

Back 5

An attempt to obtain more than one reimbursement for the same business-related expense.

Front 6

skimming

Back 6

the theft of cash from a victim entity prior to its entry in an accounting system.

Front 7

cash larcney

Back 7

The theft of an organization's cash after it has been recorded in the accounting system.

Front 8

False refund scheme

Back 8

One of two main categories of register disbursements. A scheme in which a fraudulent refund is processed at the cash register to account for stolen cash.

Front 9

Fictitious refund scheme

Back 9

A false refund scheme in which an employee processes a fake refund transaction as if a customer were actually returning merchandise, and pockets the cash.

Front 10

Overstated refund scheme

Back 10

A false refund scheme in which an employee overstates the amount of a legitimate customer refund, gives the customer the actual amount of the refund, and steals the excess.

Front 11

False void Scheme

Back 11

One of the two main categories of register disbursements. A scheme in which an employee accounts for stolen cash by voiding a previously recorded sale.

Front 12

Unconcealed larceny

Back 12

schemes in which an employee steals an asset without attempting to conceal the theft in the organization's books and records.

Front 13

Fraudulent write-offs

Back 13

A method used to conceal the theft of noncash assets by justifying their absence on the books. Stolen items are removed from the accounting system by being classified as scrap, lost or destroyed, damaged, being bad debt, scrap shrinkage, discount and allowances, returns, etc.

Front 14

Shrinkage

Back 14

The unaccounted-for reduction in an organization's inventory that results from theft. Shrinkage is a common red flag of fraud.
So, basically, inventory is less than in ought to be and its attributed to shrinkage?

Front 15

Perpetual Inventory

Back 15

A method of accounting for inventory in the records by continually updating the amount of inventory on hand as purchases and sales occur.

Front 16

Physical Inventory

Back 16

A detailed count and listing of assets on hand.

Front 17

Forced Reconciliation

Back 17

A method of concealing fraud by manually altering entries in an organization's books and records or by intentionally miscomputing totals. In the case of noncash misappropriations, inventory records are typically altered to create a false balance between physical and perpetual inventory.

Front 18

Physical padding

Back 18

A fraud concealment scheme in which the fraudsters try to create the appearance that there are more assets on hand in a warehouse or stockroom than there actually are (e.g., by stacking empty boxes to create illusion of extra inventory).

Front 19

Bid pooling

Back 19

A process by which several bidders conspire to split contracts, thereby ensuring that each gets a certain amount of work.

Front 20

Bid rigging

Back 20

A process by which an employee assists a vendor to fraudulently win a contract through the competitive bidding process.

Front 21

Bid splitting

Back 21

A fraudulent scheme in which a large project is split into several component projects so that each sectional contract falls below the mandatory bidding level, thereby avoiding the competitive bidding process.

Front 22

Bribery

Back 22

The offering, giving, receiving, or soliciting of something of value, for the purpose of influencing an official act.

Front 23

Business diversions

Back 23

A scheme that typically involves a favor done for a friendly client. Business diversions can include situations in which an employee starts his own company, and while still employed by the victim, steers existing or potential clients away from the victim and toward the employee's new company.

Front 24

Collusion

Back 24

A secret agreement between two or more people for a fraudulent, illegal, or deceitful purpose, such as overcoming the internal controls of their employer.

Front 25

Commercial bribery

Back 25

The offering, giving, receiving, or soliciting of something of value for the purpose of influencing a business decision without the knowledge or consent of the principal.

Front 26

Conflict of interest

Back 26

Situation where an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company as a result.

Front 27

Economic extortion

Back 27

The obtaining of property from another with the other party's "consent" having been induced by wrongful use of actual or threatened force or fear.

Front 28

illegal gratuities

Back 28

The offering, giving, receiving, or soliciting of something of value for, or because of, an Official act.

Front 29

Norming or calibrating

Back 29

The process of observing behavior before critical questions are asked. The purpose is to help assess the subject's verbal and nonverbal reactions to threatening questions.

Front 30

Oaths

Back 30

Certain phrases used frequently by liars to add weight to their false testimony.

Front 31

Character testimony

Back 31

An attempt to add credibility to a witness's lie by requesting that you "check with my minister" or "ask my wife"

Front 32

Illustrators

Back 32

Motions made primarily by the hands to demonstrate points when talking. The use of illustrators usually changes during deception.

Front 33

Anatomical physical responses

Back 33

Involuntary reactions by the body to fright. They include increased heart rate, shallow or labored breathing, and excessive perspiration. These reactions are typical of dishonesty.

Front 34

Manipulators

Back 34

Motions made by individuals such as picking lint from clothing, playing with objects such as pencils, or holding one's hands while talking. Manipulators are displacement activities, done to reduce nervousness.

Front 35

Fleeing position

Back 35

A posture adopted by an individual under stress during an interview. The head is facing the interviewer, which the feet and legs are pointed toward the door in an unconscious effort to flee the interview.

Front 36

Benchmark Admission

Back 36

A small admission made to wrongdoing that signal's a subject's willingness to confess. It is made as a result to an alternative question posed by the interviewer that gives the subject two ways to answer, either of which is an admission of culpability. Example: "Did you just want extra money, or did you do this because you had financial problems?"

Front 37

Excuse clause

Back 37

A clause inserted in a signal statement that encourages the confessor to sign the statement. It offers a moral, not legal, excuse for wrongdoing. Example: "I wouldn't have done this if it had not been for pressing financial problems. I didn't mean to hurt anyone."