Accounting 3600 Chapter 5

Front 1

fraud

Back 1

any means used to achieve an unfair advantage over another person

Front 2

1. false statement
2. about a material fact
3. intent to deceive
4. victim relied on fact
5. victim suffered an injury/loss

Back 2

legal qualifications for fraud (5)

Front 3

misappropriation of assets

Back 3

employee fraud, theft of company assets for personal gain

Front 4

fraudulent financial reporting

Back 4

misstating financial health of a company by intentionally misstating the amounts and disclosures in financial statements to deceive users

Front 5

1. misappropriation of assets
2. fraudulent financial reporting

Back 5

two types of fraud

Front 6

Treadway Commission

Back 6

NationL commission on fraudulent financial reporting

Front 7

1. create organizational environment - integrity
2. understand factors that contribute
3. assess likelihood of fraudulent financial reporting
4. design/implement internal controls - reasonable assurance

Back 7

4 things companies can d to minimize fraudulent financial reporting

Front 8

1. pressure
2. opportunity
3. rationalization

Back 8

3 conditions that allow fraud to occur

Front 9

pressure

Back 9

motivation or incentive for fraudster to commit crime

Front 10

opportunity

Back 10

opening/gateway that allows the fraudster to 1. commit the crime 2. conceal the crime

Front 11

kiting

Back 11

creating cash by taking advantage of the time lag between when checks are cashed and when they clear the bank

Front 12

lapping

Back 12

employee steals payment from customer A, uses customer B's money to credit customer A, use customer C to credit customer B, etc.

Front 13

rationalization

Back 13

justification for committing a crime

Front 14

computer fraud

Back 14

any crime where knowledge of computer technology is essential in either committing, investigating or prosecuting the crime

Front 15

1. input fraud
2. processor fraud
3. computer instructions fraud
4. data fraud
5. output fraud

Back 15

5 types of computer fraud

Front 16

input fraud

Back 16

easiest and simplest type of fraud to perpetrate; alter system input. Just have to understand how the system operates

Front 17

processor fraud

Back 17

fraud resulting from authorized use of the system (shopping online on company computer)

Front 18

computer instructions fraud

Back 18

tampering with the software that runs company computer systems (computer virus/worm)

Front 19

data fraud

Back 19

copying/altering/viewing company data files without authorization

Front 20

output fraud

Back 20

misusing system output (creating false paychecks)