Forensic Accounting Ch 1

1-1 Define fraud and identify a potentially fraudulent situation.

Fraud is an intentional deception, whether by omission or co-mission, that causes its victim to suffer an economic loss and/or the perpetrator to realize a gain. In the broadest sense, fraud can encompass any crime for gain that uses deception as its principle technique.

1-2 Differentiate between fraud and abuse.

Fraud is an intentional deception, whether by omission or co-mission, that causes its victim to suffer an economic loss and/or the perpetrator to realize a gain. In the broadest sense, fraud can encompass any crime for gain that uses deception as its principle technique. Abuse can be defined as: “1. A deceitful act, deception; 2. A corrupt practice or custom; 3. Improper use or treatment, misuse.” To deceive is “to be false; to fail to fulfill; to cheat; to cause to accept as true or valid what is false or invalid.”

For example, suppose a teller was employed by a bank and stole $100 from her cash drawer. We would define that broadly as fraud. But if she earns $500 a week and falsely calls in sick one day, we might call that abuse—even though each has the exact same economic impact to the company—in this case, $100.

1-3 Describe the services that a forensic accountant might provide related to a marital dispute.

(a) establishment of the lifestyle and financial needs of one or the other spouse,

(b) establishment of the ability of a spouse to pay those needs,

(c) establishment of the martial and non-marital assets and liabilities of the marital estate available for Equitable Distribution, including the valuation of any business in which either party, directly or indirectly, owns or owns an interest, and

(d) whether deferred compensation is an asset available for equitable distribution or income for alimony and/or child support, and

(e) Uncovering undisclosed assets.

1-4 Difference between an audit, fraud examination, and forensic accounting engagement.

Issue...