KASNEB CFFE flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fraud Triangle

A model stating that fraud occurs when three conditions coexist: a pressure or incentive, an opportunity created by weak controls, and a rationalisation that lets the person justify the act.

Fraud Diamond

An extension of the fraud triangle that adds capability as a fourth element, recognising that the fraudster must hold the position, knowledge and skill to commit and conceal the act.

Asset Misappropriation

A branch of the ACFE fraud tree covering theft or misuse of an organisation's resources, such as skimming, cash larceny, billing schemes and payroll fraud; it is the most frequently reported fraud type.

Segregation of Duties

A preventive control that divides custody of assets, authorisation of transactions and record keeping among different people so no single individual can both commit and conceal a fraud.

COSO Control Environment

The foundation component of the COSO framework, comprising tone at the top, ethical values, board oversight, organisational structure and commitment to competence that shape the entity's control consciousness.

Whistleblowing Hotline

An independent, confidential reporting channel letting employees and third parties report suspected wrongdoing anonymously; statistically it is the most productive source of initial fraud detection.

Residual Fraud Risk

The fraud risk remaining after management applies controls, assessed by evaluating inherent risk against the design and operating effectiveness of the mitigating preventive and detective controls.

Predication

The reasonable factual basis required before launching a fraud examination; without adequate predication the investigation may be unjustified and expose the examiner to legal liability.

Cognitive Interview

A witness technique that reinstates mental context, requests everything remembered regardless of perceived relevance, varies retrieval order and changes perspective to improve completeness and accuracy of recall.

PEACE Interview Model

A structured framework of Planning and preparation, Engage and explain, Account, Closure, Evaluate, used to obtain reliable accounts without coercion and associated with UK investigative practice.

Chain of Custody

A chronological written record of the seizure, transfer, storage and analysis of evidence, showing who handled it, when and why, so its integrity can be demonstrated in court.

Accusatory Interview

The final-stage interview of a suspected fraudster, held after corroborating evidence is secured, in which the interviewer confronts the subject with that evidence and seeks an admission or explanation.

Corroboration of Admissions

The principle that a confession or admission from an interview must be supported by independent evidence, because admissions alone may be unreliable, mistaken or improperly obtained.

Benford's Law

A statistical expectation that in many genuine data sets the leading digit 1 appears about 30.1% of the time and 9 only about 4.6%; significant deviation may indicate fabricated figures.

Net Worth Method

An indirect proof technique computing unexplained income as the increase in net worth plus personal expenditures minus reported after-tax income; a material unexplained balance suggests unreported funds.

Audit Risk Model

The formula AR = IR × CR × DR, rearranged as detection risk equals audit risk divided by inherent risk times control risk; it determines how much substantive testing is planned.

Analytical Procedures

Evaluations of financial information by comparison with prior periods, budgets or ratios to identify unusual fluctuations; they are required at the planning and final review stages of an audit.

Cut-off Testing

Substantive testing of transactions immediately before and after a period end to confirm they are recorded in the correct period, exposing window dressing and premature revenue recognition.

Materiality Threshold

The amount by which misstatements could influence the economic decisions of users; commonly benchmarked at about 5% of profit before tax, 1% of revenue or 1% of total assets.

Professional Scepticism

An attitude of questioning mind and alertness to conditions indicating possible misstatement due to error or fraud, including distrust of evidence until it has been independently corroborated.

Five Elements of Fraud

Common-law civil fraud requires a false representation of a material fact, knowledge of its falsity, intent to deceive, justifiable reliance by the victim, and resulting damage.

Self-Interest Threat

An ethical threat where a professional's financial or personal interest, such as a bonus, shareholding or referral fee, improperly influences judgement; safeguards include disclosure and removal from the engagement.

Money Laundering Stages

Placement of illicit funds into the financial system, layering through complex transactions to obscure their origin, and integration where the funds re-enter the economy appearing legitimate.

Failing to Prevent Bribery

A strict liability corporate offence under the UK Bribery Act where a commercial organisation fails to prevent an associated person bribing another; adequate procedures is the only defence.

Independent Non-Executive Director

A board member with no material relationship with the company, relied on to challenge executive management objectively and to staff key committees such as audit and remuneration.

Good-Faith Whistleblower

A person who reports suspected wrongdoing on a reasonable belief in its truth, protected from retaliation and dismissal even if the allegation is later not substantiated.

Order of Volatility

A ranking of digital evidence by how quickly it changes or disappears; collect CPU registers and cache first, then RAM and network state, then disks, then backups.

Forensic Imaging

Creating a bit-for-bit copy of storage media using a write blocker, then computing a hash such as SHA-256 on both source and image to prove they are identical.

Write Blocker

A hardware or software device that prevents write instructions reaching evidence media during acquisition or examination, preserving it from alteration and supporting admissibility in proceedings.

File Carving

A technique for recovering deleted files by scanning unallocated disk space for known file headers and footers, rather than relying on the file system's deleted index entries.

MAC Timestamps

File-system metadata recording when a file was modified, accessed and created or changed; contradictions among these times can indicate anti-forensic tampering or backdated documents.

Business Email Compromise

A cyber-enabled fraud in which an attacker impersonates an executive or supplier, often after compromising a genuine mailbox, to trick staff into making a fraudulent payment.