This document discusses different types of employee and management fraud and internal controls to prevent fraud. It defines employee fraud as theft of company assets by non-management employees who bypass internal controls. Management fraud is more dangerous as it often involves falsifying financial statements and can damage a company before being detected. The document also outlines guidelines for strong internal controls, including clear responsibilities, routine procedures, separating duties, and numbered documents. It describes the relationship between accounting systems and internal controls, with each relying on the other to ensure reliable accounting data and compliance.

2. ACCOUNTING
M.QASIM
16-NTU-1303

3. Employee fraud
 A fraud by non management employees,is generally desighned to directly
convert cash or other assets to the employee,s personal benefits
 An employee dodge the company’s internal control system for personal gain
 usually theft assets from company
 How can it be prevented to detected ?
 an effective system of internal control
 EXAMPLE
 Loss of assets
 Sellary loss

4. Employee fraud
 If one employee handles all aspects of a transaction, the danger of
irregularities increases.

5. Management fraud
 Mnagement fraud is more dangerous then employee fraud because it often
escapes detection until the organization has suffered permanent damage or
loss.
 fraud refers to misrepresentation made by the top management of a business
to persons of employees.
 usually management fraud does not involve the direct theft of asset.

6. Management fraud
 Management fraud typically involve misslating financial statements in order
to mislead readers of those statements or to take advantage of incentives or
other benefits tied to earnings.
 Misuse of company assets
 The impact of management fraud
 EXAMPLE
 business loss
 loss of assets

7. Internal control
All measures taken by an organization for the purposes OF
 Protecting its resources against waste, fraud,or inficient use.
 Ensuring the reliability of accounting data
 securing compliance with management policies.
 evaluating the performance of all employees.

8. Guidelines to achieving strong
internal control
 Establish clear lines of responsibility
 Establish routine procedures for processing each type of transaction
 Subdivision of duties
 Rotation of employees
 Serially numbered documents
 Financial forecasts

9. Relationship between the accounting
system and internal control
 An accounting system is to provide useful financial information to decision
makers.
These two systems are closely related;in fact, each depends greatly upon the
other
 Accounting system depends upon internal control to ensure the reliability of
accounting data.Internal control explains the nature and the very existence of
many accounting records,reports,docoments,and procedures……

10. THANKS