CFEEN Niger flashcards

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

Fraud Triangle

A model holding that occupational fraud arises when three conditions converge: a pressure or incentive, an opportunity created by weak controls, and a rationalization that lets the person justify the act.

Fraud Diamond

An extension of the fraud triangle that adds capability as a fourth element, recognizing that the person must have the position, knowledge, or skill to both commit and conceal the fraud.

Segregation of Duties

A control that divides custody of assets, authorization of transactions, and recordkeeping among different people so that no single individual can both commit and hide an error or fraud.

Control Environment

The COSO component reflecting the tone set by leadership: integrity, ethical values, commitment to competence, board oversight, organizational structure, and authority and responsibility assignments.

Management Override

The risk that executives use their authority to circumvent controls, enter unsupported journal entries, or bias estimates; auditors must design procedures that specifically address this presumed risk.

Fraud Risk Assessment

A structured process to identify fraud risks, evaluate their likelihood and impact, design preventive and detective controls, and monitor results, repeated periodically as conditions change.

Hotline Detection

An anonymous reporting channel that lets employees, vendors, and others report suspected misconduct; reporting data consistently show tips as the leading source of initial fraud detection.

Deterrence Mechanism

Deterrence works when potential offenders perceive that detection is likely and consequences are certain; the perception of being caught matters more than the severity of the stated penalty.

Asset Misappropriation

Theft or misuse of an organization's resources by insiders, including cash larceny, skimming, check tampering, billing and payroll schemes, and inventory or expense reimbursement abuse.

Skimming Versus Larceny

Skimming removes cash before it is recorded on the books, so records stay balanced; larceny steals cash already recorded, creating a visible shortage that must be concealed.

Shell Company Scheme

A billing scheme in which the fraudster creates or controls a fictitious vendor, submits invoices for nonexistent goods or services, and approves payment to that entity.

Pay-and-Return Scheme

A billing scheme in which the company legitimately owes a vendor, the fraudster pays the invoice, then returns goods or claims a refund directed to themselves.

Ghost Employee

A fictitious person added to the payroll by someone with payroll access, so wages are paid and intercepted by the fraudster without any real work being performed.

Check Tampering

Stealing or altering a check the organization has already prepared, through forged maker signature, forged endorsement, altered payee, or an authorized-maker scheme.

Corruption Schemes

Schemes in which an insider improperly uses influence in a business transaction to obtain a benefit, covering bribery, illegal gratuities, economic extortion, and conflicts of interest.

Fictitious Revenue

Financial statement fraud that records sales that never occurred, often through fake customers or round-trip transactions, inflating reported income and receivables.

Net Worth Analysis

An indirect method that compares a subject's increase in net worth plus personal expenditures to known legitimate income; unexplained excess suggests illicit proceeds.

Expense Reimbursement Fraud

Submitting claims for expenses not incurred, overstated amounts, or duplicate receipts, often exploiting weak review of supporting documentation and approval thresholds.

Chain of Custody

A chronological record documenting who collected, handled, transferred, and stored each item of evidence, its purpose being to show the evidence was not altered or tampered with.

Documentary Evidence

Evidence in written or electronic form such as invoices, ledgers, contracts, emails, and bank statements; it is the most common evidence type in financial investigations.

Interview Sequencing

A planned order of interviews: start with neutral third parties, proceed to witnesses and knowledgeable employees, and interview the suspected subject last after corroborating evidence is secured.

CAATs

Computer-assisted audit techniques use software to sort, filter, join, and analyze full data populations, letting investigators test every transaction rather than a sample.

Benford's Law

A statistical expectation that in many natural data sets the leading digit is 1 about 30 percent of the time and higher digits progressively less often; large deviations may signal manipulation.

Fraud Examination Report

A written account of the investigation stating the allegation, scope, methodology, evidence, findings, and estimated loss, written clearly enough for readers who may include a court.

Red Flag

An indicator or pattern suggesting possible fraud, such as unusual period-end entries, round-dollar amounts, missing documentation, or an employee resistant to taking leave.

Fraud Elements

The elements a claimant typically must establish: a false statement of material fact, knowledge of falsity, intent to deceive, justifiable reliance by the victim, and resulting damages.

Burden of Proof

The standard a party must meet: beyond a reasonable doubt in criminal cases, and a preponderance of the evidence, meaning more likely than not, in civil cases.

Hearsay Rule

An out-of-court statement offered to prove the truth of the matter asserted is generally inadmissible, subject to exceptions such as business records and statements against interest.

Admissibility

The threshold for a court to accept evidence: it must be relevant to a fact in issue, material, and competent, meaning not barred by exclusionary rules.

Statute of Limitations

A law setting the maximum time after an event within which legal proceedings may be brought; periods differ by offense and may be paused by concealment or continuing conduct.

Privilege

A legal protection shielding certain communications, such as attorney-client exchanges, from compelled disclosure; investigators must avoid intruding on privileged material during document review.