While the presence of these red flags doesn't imply that fraud is being committed, understanding and recognizing the behavioral red flags displayed by fraud perpetrators can help organizations detect fraud and mitigate losses. Read more findings from the world's largest global fraud study at ACFE.com/RTTN.
Most often, victims of fraud do not take legal action against perpetrators. This is because legal action can be: a. Unproductive. b. Embarrassing. c. Expensive. d. All of the above. d. All of the above. 20. The best argument for taking legal action against fraud perpetrators is: a.
A fraud perpetrator uses the float time between banks to give the impression that he had money in his accounts.
Most fraud perpetrators have profiles that are similar to those of other people. d. When fraud does occur, the most common initial reaction by those involved in the fraud is confession. c. Most fraud perpetrators have profiles that are similar to those of other people a. overstate assets and net income.
Missing documents that are fraud red flags include registration of motor vehicles, lists of sales and purchases, checkbooks, and inventory reports. When such records disappear, it may point to an undesirable situation that may lead to loss of certain assets or money.
Three Financial Statements The three financial statements are the income statement, the balance sheet, and the statement of cash flows.
To prevent fraud from happening, organizations must first acknowledge that fraud exists and create awareness among the stakeholders. Organizations should start by training their employees on how to detect fraud at work.
There are cases when a company’s accounting department may erroneously process duplicate payments to a vendor or service provider. If the mistake was genuine, the officers involved ought to identify such errors and report so that urgent action can be taken.
Due to the addictive nature of gambling, the employee’s income may be insufficient to finance their gambling activities and they may feel forced to do anything to earn extra income.
Frequent complaints. Frequent complaints about certain personnel or processes may be an indicator of fraud. When an organization receives repeated complaints about a senior executive, it should not assume that it’s just ordinary venting.
When a company hires employees with debt problems, there is a likelihood that they will find opportunities to get extra income above their salary to pay debts. It may mean engaging in opportunistic fraud with the intention of obtaining money that they are not entitled to.