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Wiley CIAexcel Exam Review 2014: Part 2, Internal Audit Practice by S. Rao Vallabhaneni

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DOMAIN 3

Fraud Risks and Controls (5–15%)

3.1 Types of Fraud

3.2 Controls to Prevent or Detect Fraud

3.3 Audit Tests to Detect Fraud

3.4 Integrating Analytical Relationships to Detect Fraud

3.5 Interrogation or Investigative Techniques

3.6 Forensic Auditing

3.7 Use of Computers in Analyzing Data for Fraud and Crime

3.8 Sample Practice Questions

3.1 Types of Fraud

In this section, topics such as types of fraud, theft of assets, fraud by frequency, fraud involving conspiracy, and varieties of fraud are discussed.

(a) Overview of Fraud

What is fraud? Here is the legal definition of fraud by most statutes:

Fraud is a generic term and embraces all the multifarious means that human ingenuity can devise, which are resorted to by one individual, to get an advantage over another by false representations. It includes all surprise, trick, cunning, and unfair ways by which another is cheated. Fraud is a term of law, applied to certain facts as a conclusion from them, but is not in itself a fact. It has been defined as any cunning deception or artifice used to cheat or deceive another.

Cheat and defraud means every kind of trick and deception, from false representation and intimidation to suppression and concealment of any fact and information by which a party is induced to part with property for less than its value or to give more than it is worth for the property of another. The terms fraud and bad faith are synonymous when applied to the conduct of public offenders.

(b) Types of Fraud

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