Fraud Examination: Ch 5 - Recognizing the Symptoms of Fraud

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Last updated 4:57 PM on 9/15/26
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7 Terms

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6 groups of fraud symptoms:

  1. Accounting anomalies

  2. Internal control weaknesses

  3. Analytical anomalies

  4. Extravagant lifestyle

  5. Unusual behavior

  6. Tips and complaints


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Accounting Anomalies

Typically involve problems with:

  • Source Documents

  • Faulty journal entries

  • Inaccuracies in ledgers


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Common internal control fraud symptoms:

  • Lack of segregation of duties

  • Lack of physical safeguards

  • Lack of independent checks

  • Lack of proper authorization

  • Lack of proper documents and records

  • Overriding of existing controls

  • Inadequate accounting system


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Analytical Anomalies

Relationships in financial or nonfinancial data that dont make sense such as change in volume, mix, or price

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Fraud can be detected in all elements of the Fraud triangle:

  • Theft Act

  • Concealment

  • Conversion


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Why people hesitant to come forward with fraud suspicions:

  1. Impossible to know for sure that fraud is happening

  2. Fear of reprisal for being a whistleblower

  3. Often intimidated by the perp

  4. Feel like snitching is wrong

  5. Company hasn’t made it easy to report fraud


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What is the most common internal control problem?

Overriding existing internal controls