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Forensic Accounting and Fraud Investigation for Non-Experts, 3rd Edition by Michael Sheetz, Howard Silverstone, Frank Rudewicz, Stephen Pedneault

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CHAPTER 2

Fraud in Society

What Is Fraud?

Fraud is an activity that takes place in a social setting and has severe consequences for the economy, corporations, and individuals. It is an opportunistic infection that bursts forth when greed meets the possibility of deception. The fraud investigator is like the attending physician looking and listening for the signs and symptoms that reveal an outbreak.

The Association of Certified Fraud Examiners defines occupational fraud as: “the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets.”1

Before dealing with the accounting details and the investigation itself, we introduce some attempts by the courts, law enforcement, and regulatory authorities to define fraud. Since the subject of this book is workplace fraud, we then outline the nature of workplace fraud through a look at the accounting cycle. We complete the tour with a look at the motives of fraudsters and the consequences of their acts.

The modern definition of fraud is derived primarily from case and statute law, but many of the ancient elements remain. Those roots can be traced to fraus, a Latin noun carrying a wide range of meanings clustered around the notions of harm, wrongdoing, and deceit. The modern definition derived from case law focuses on the intent of the fraudster(s) to separate the trusting victim from property or a legal right through deception for their own benefit. ...

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