India Business Database .com
What is Fraud?
Fraud encompasses a range of irregularities and illegal acts characterised by intentional deception or
misrepresentation, which an individual knows to be false or does not believe to be true.
(Practice Advisory
1210.A2-1, Institute of Internal Auditors)

Types of Fraud:
1. Misrepresentation or concealment of material facts
2. Bribery
3. Conflict of interest
4. Theft of money or property
5. Theft of intellectual property
6. Breach of fiduciary duty
7. Statutory offences

Why do Frauds occur?
There are generally three factors that influence the commission of fraud.
1. Opportunity: Failure of controls, Poor control designs, lack of controls or overriding existing controls.
2. Motive: Rationalising acts, pressure, power or other motivating factors.
3. Rationalisation: Denial of acts, cultural differences or personal difficulties.
Audit vs Fraud Examination
Opinion: Expresses an opinion on the
financial statements
Affix Blame: Establishes who is
Techniques: Examination of financial
Techniques: Examination of
documents, outside data & interviews
Approach: Professional Skepticism
Proof: Establish sufficient proof to
support allegations of fraud
Recurring: Conducted on a regular
and concurrent basis
Non Recurring: Conducted only with
specific predication
General: General examination of
financial data
Specific: Resolve specific allegations
Non Adversarial: Only an opinion is
Adversarial: Efforts to affix blame
makes the examination adversarial in
ACFE, Fraud Examiner Manual, 2009
Effects of Fraud:

Banking is one of the most common industry to be affected by fraud
Small businesses are very vulnerable to occupational fraud.
Fraud is mostly committed by Accounting Department & Upper Management
Presentation on fraud risk and risk management tools