Meaning

Inconsistency renders the effective management of risk within an organization impossible. This general principle applies especially to the specific risk area of fraud. It is important that organizations are precise in what they mean by the term fraud and that they always treat its symptoms in the same way if they are to manage the threats it poses effectively. This chapter looks at what fraud actually is and what it is not. It reviews the constituent parts of fraud from three angles: first, definitions of fraud and the implications arising from them; secondly one of the classic and very important “fraud typologies” developed by the Association of Certified Fraud Examiners (ACFE); and thirdly, a brief overview of some of the law in regard to fraud, with particular reference to the position in the UK and in the US. The chapter reaches a straightforward conclusion: the costs of fraud are significant and they are likely to increase as the global economy continues to struggle.