CFEEN Niger key terms

A model holding that occupational fraud arises when three conditions meet: pressure or incentive, opportunity, and rationalization. Investigators use it to spot risk factors and to design controls that remove opportunity.

A financial or personal strain, such as debt, addiction, or performance targets, that motivates a person toward fraud. It is the hardest element for an organization to control, so prevention focuses on the other two legs of the triangle.

The condition that lets a person commit and conceal fraud, usually created by weak internal controls, excessive authority, or poor oversight. Because employers can change it, opportunity is the primary target of fraud prevention programs.

The mental justification a fraudster uses to make dishonest conduct acceptable, such as believing the employer owes them or that the act is only a temporary loan. It is internal and usually surfaces only after detection.

Measures intended to discourage fraud before it happens by raising the perceived likelihood of detection and the severity of consequences. It relies on visible controls, surprise audits, hotlines, and consistent punishment of offenders.

Policies and controls, such as segregation of duties, authorizations, and ethics training, that reduce the chance fraud can occur at all. Prevention is cheaper than detection and is aimed mainly at removing opportunity.

A person's belief that dishonest acts will be discovered. Deterrence works best when employees believe controls and reporting channels are real and effective, even if the actual detection rate is modest.

A structured process of identifying fraud schemes an organization is exposed to, rating their likelihood and impact, and linking them to specific controls. It should be repeated periodically and after major changes.

The policies, procedures, and systems a body uses to safeguard assets, produce reliable records, and comply with rules. Fraud examiners assess whether controls exist, are designed well, and actually operate.

Splitting tasks so that no single person authorizes, records, and has custody of the same asset. It is a core preventive control because collusion is needed to override it.

Two or more people cooperating to commit or conceal fraud, which defeats controls such as segregation of duties. Collusion is harder to detect because records may appear consistent across employees.

A gap where a control is missing, badly designed, or not operating as intended, leaving a fraud risk unaddressed. Examiners document deficiencies as part of their findings and recommendations.

An independent reporting channel, often anonymous, through which employees and outsiders can report suspected wrongdoing. Tips are the most common initial detection method for occupational fraud, so hotlines are a key deterrent.

Information about possible fraud supplied by an employee, customer, vendor, or other source. Tips are the leading way occupational fraud is first detected, which is why reporting programs matter.

Fraud committed by an employee against the employing organization, using the job for personal gain. It includes asset misappropriation, corruption, and financial statement fraud, with asset misappropriation most common and least costly per case.

Stealing or misusing an employer's resources, through schemes such as skimming, cash larceny, billing fraud, or inventory theft. It is the most frequent category of occupational fraud but usually the smallest in dollar loss.

Using one's position to influence a business transaction for personal benefit, for example through bribery, kickbacks, or conflicts of interest. It often involves an outside party and can occur without direct theft of cash.

Deliberately misstating an organization's financial reports, for example by inflating revenue or hiding liabilities. It is the least common occupational fraud category but causes the largest median losses.

Stealing cash before it is recorded in the accounting system, so the books never show the money. It is difficult to detect from records alone and is often proven through customer or third-party evidence.

Stealing cash that has already been recorded on the books, such as taking from a till or deposit. Because the entry exists, larceny often surfaces as a reconciliation difference rather than a missing sale.

A fraud in which an employee causes the employer to pay a false or inflated invoice, often through a shell company or an accomplice vendor. It is a common register disbursement and purchasing fraud.

A business entity with no real operations, set up to receive fraudulent payments or hide ownership. Examiners look for shared addresses, bank accounts, and control by an employee or relative.

A payment made to an employee by a vendor or contractor in return for favorable treatment, such as inflated orders or approved invoices. It is a corruption scheme that usually requires an accomplice outside the organization.

Offering, giving, receiving, or soliciting something of value to influence an official act or business decision. In fraud examination, bribery is treated as a corruption scheme and often involves public officials or procurement staff.

A situation where an employee's personal or financial interest could improperly influence their work duties. Undisclosed conflicts become fraud schemes when the person uses their position for hidden gain.

Recording revenue that is not earned or not real, such as booking sales before delivery or holding open periods. It is a common financial statement scheme because it directly improves reported profit.

Overstating liabilities or reserves in good years and releasing them in bad years to smooth reported earnings. It is a financial statement scheme that hides volatility and misleads users of the reports.

An investment fraud that pays earlier investors with money from later investors rather than from real profits. It collapses when new contributions slow, and examiners trace the flow of funds to prove the pattern.

Deceiving people into investing based on false or misleading information, such as guaranteed returns or nonexistent projects. It often involves affinity targeting and documents that cannot be independently verified.

A process of resolving fraud allegations from inception to disposition, including evidence gathering, interviews, reports, and testimony. It differs from an audit because it is focused on a specific allegation rather than general assurance.

The set of circumstances that would lead a reasonable professional to believe fraud has occurred, is occurring, or will occur. It is the threshold that justifies starting a fraud examination.

Information, documents, testimony, or objects that support or refute an allegation. Examiners must gather it legally, preserve it, and maintain a chain of custody for anything that may be used in proceedings.

A documented record of who handled evidence, when, and where, from seizure to presentation. Gaps in the record can make evidence inadmissible or weaken its weight in court.

A structured conversation to obtain facts from witnesses, subjects, or others. Fraud examiners plan interviews carefully, usually speaking with the subject last, and document statements accurately.

Whether evidence may be considered by a court, determined by rules on relevance, reliability, and lawful acquisition. Evidence obtained improperly may be excluded regardless of how probative it is.

The level of proof a party must present to win. Criminal cases require proof beyond a reasonable doubt, while civil fraud cases generally require a preponderance of the evidence.

A wrong pursued by a private party for compensation, such as damages or rescission, rather than punishment. The standard of proof is lower than in criminal cases, and the same conduct can lead to both.

Fraud prosecuted by the state as an offense, requiring proof of intent and elements defined by statute. Penalties can include fines, restitution, and imprisonment, and prosecution is brought by public authorities.

The combination of the likelihood that a fraud scheme will occur and the impact if it does. Organizations rate and prioritize risks to decide where to place controls and monitoring.