Fraud

1. Fraud, Internal Control, and Cash
A Creative Commons Licensed
Presentation
Created for Study Purposes

2. Overview
• - Understanding fraud in accounting
• - Components of internal control
• - Cash management and safeguards
• - The fraud triangle and prevention

3. What is Fraud?
• Fraud is an intentional deception to secure
unfair or unlawful gain.
• Common examples:
• - Asset misappropriation
• - Financial statement manipulation
• - Corruption and bribery

4. The Fraud Triangle
• The Fraud Triangle explains why fraud occurs:
• - Pressure (e.g., financial need)
• - Opportunity (control weakness)
• - Rationalization (self-justification)

5. Internal Control Definition
• Internal control is a process designed to
provide reasonable assurance of:
• - Reliable financial reporting
• - Compliance with laws and regulations
• - Safeguarding of assets
• - Efficient and effective operations

6. Principles of Internal Control
• - Establish responsibility
• - Segregation of duties
• - Documentation procedures
• - Physical controls
• - Independent internal verification
• - Human resource controls

7. Cash and Internal Controls
• Cash is highly vulnerable to theft and fraud.
• Effective internal controls include:
• - Daily deposits of receipts
• - Separation of cash handling and accounting
• - Surprise cash counts
• - Bank reconciliations

8. Conclusion
• Strong internal controls can significantly
reduce fraud risk.
• Understanding the fraud triangle helps
identify vulnerabilities.
• Cash handling must follow rigorous
procedures to protect assets.