Legal Elements of Fraud
False statement made.
Knowledge that it’s false.
Victim relies on the statement.
Victim suffers damage or loss because of it.
Fraud
intentional deception (by omission or commission) causing a victim’s loss and/or gaining an advantage.
Larceny
stealing someone else’s property without consent.
Conversion
Take possession of property that does not belong to you, owner deprived of property for period of time
Embezzlement
Willfully take property that you were in a position of employment or trust
Fiduciary duty
special trust relationship; breach leads to liability
Forensic accounting
Application of financial principles and theories to facts or
hypotheses at issue in legal dispute
Technical competence
accounting, auditing, finance, quantitative methods, legal/regulatory knowledge.
Investigative skills
collecting evidence, analyzing documents/data, performing interviews, critical thinking.
Communication skills
writing reports, delivering testimony, presenting visuals/charts, explaining findings to non-accountants.
Fraud Triangle
Pressure + Opportunity + Rationalization → conditions for fraud
Elements of Fraud
Act, Concealment, Conversion
Predication
basis for investigation
Professional Skepticism
neutral, questioning mindset
Fraud Tree
classification of fraud types (asset misappropriation, corruption, financial statement fraud).
Red Flags
anomalies in size, behaviour, patterns; nonfinancial/financial mismatches.
Forensic Accountant
tech + investigative + communication skills, legal focus.
Controls that reduce fraud loss
data analytics, hotlines, surprise audits, job rotation, formal fraud risk assessments.
Hypothesis-Evidence Matrix
tool to test competing theories with evidence.
Fiduciary capacity
The business one transacts or the money or property one handles, is for the benefit of another person
