BA 211 Chapter Notes - Chapter 4: Public Company Accounting Oversight Board, Internal Control, Securities Fraud
2 Oct 2018
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Document Summary
Fraud is an intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party. Fraud has increased with the expansion of e-commerce over the internet. The opportunity to commit fraud usually arises from weak internal controls such as improper segregation of duties and/or improper access to assets, or from a weak control environment. The perpetrator engages in rationalization, or distorted thinking, to justify their actions. Fraud is defined by state, federal, and international law as illegal. Perpetrators usually do it for their own short-term economic gain. Some perpetrators incur economic losses that far outstrip the gains of the fraudster. Fraud violates the rights of many for the temporary betterment of a few and for the ultimate betterment of no one. Fraud is the ultimate unethical act in business. Explain the objectives and components of internal control.
