a fraud that involves the theft or misuse of an organization's assets. Common examples include skimming cash, stealing inventory, and payroll fraud.
a subcommittee of the board of directors responsible for monitoring audit activities and serving as a surrogate for the interests of shareholders; it should be composed of outside members of the board that is, members who are independent of the organization.
board of directors
the major representative of stockholders to help ensure that the organization's charter and that there is proper accountability.
a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organization. The owners (stockholders) elect a board of directors to provide oversight of the organization's activities and accountability to stakeholders.
fraudulent financial reporting
the intentional manipulation of reported financial results to misstate the economic condition of the organization.
an intentional act involving the use of deception that results in a material misstatement of the financial statements.
a model that includes incentives, opportunity, and rationalization to commit fraud; if one of these elements is absent then fraud is much less likely to occur.
this type of fraud occurs when the deposits of current investors are used to pay returns on the deposits of previous investors; no real investment is happening.
risk factors suggesting a heightened risk of fraud.
Sarbanes-Oxley Act of 2002
Broad legislation mandating new standard setting for audits of public companies and new standards for corporate governance.
anyone who is influenced, either directly or indirectly, by the actions of a company; they extend beyond the shareholders of a company.
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