Term
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Definition
knowingly making material misrepresentations of fact with the intent of inducing someone to believe the falsehood and act upon it and thus suffer a loss |
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Term
Employee Fraud or Misappropriation of Assets |
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Definition
the use of fraudulent means to take money or other property from an employer |
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Term
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Definition
type of fraud involving employees or nonemployees wrongfully taking money or property entrusted in their care, custody and control |
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Term
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Definition
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Term
What are the three phases of Employee fraud? |
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Definition
1. Fraud act itself 2. conversion of assets to fraudsters use 3. cover-up |
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Term
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Definition
Authorization of Transactions Recording of transactions Custody of assets |
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Term
What are employee fraud red flags? |
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Definition
signs and signals of fraud oddities and unusual events |
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Term
What are some examples of employee fraud red flags? |
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Definition
lose sleep drink much take drugs can't relax sweat excessively |
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Term
What makes fraud possible? 3 factors... |
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Definition
Motivation Opportunity Rationalization |
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Term
How might a company management prevent fraud? |
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Definition
manage pressures in the workplace internal control procedures and monitoring integrity by example and enforcement - code of conduct - hiring/firing |
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Term
Why is cash so susceptible to theft? |
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Definition
- highly liquid - not easily identifiable as company property - highly portable |
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Term
How can theft of cash be prevented? |
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Definition
- have two people open the mail containing customer receipts - restrictively endorse checks after removing from envelope - prepare a list of cash receipts as early in the process as possible - separate actual cash from the recordkeeping documents |
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Term
Test of controls over Cash receipts |
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Definition
- establish input, processing, and output control activities |
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Term
What is the importance of a bank reconciliation? |
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Definition
it is the primary means of valuing cash in the financial statements |
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Term
What is the importance of a bank statement? |
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Definition
- has the # and $ amounts of deposits and checks can be compared to detail data on statement - account holder's federal business ID# is on the statement - can be used in other databases |
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Term
What is the importance of a cut-off bank statement? |
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Definition
its the auditor's information source for validating the bank rec. items |
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Term
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Definition
the deliberate floating of funds between two or more bank accounts |
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Term
What is the proof of cash? |
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Definition
reconciliation in which the bank balances, bank report of cash deposited, and the bank report of cash paid |
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