C
Chain of Custody
DEFINITION
Documented handling of evidence.
MEANING
Prevents tampering claims.
EXAMPLE
Logged handover of storage media.
Collusion
DEFINITION
Cooperation between parties to commit fraud.
MEANING
Undermines traditional controls.
EXAMPLE
Buyer and vendor coordinate fake invoices.
Conflict of Interest
DEFINITION
A conflict of interest arises when personal interests interfere with professional responsibilities.
MEANING
Undisclosed conflicts increase fraud and compliance risks.
EXAMPLE
Awarding contracts to a company owned by a family member.
E
Employee Complaints Red Flag
DEFINITION
Employee complaints.
MEANING
Early warning signs.
EXAMPLE
Complaints about procurement favoritism.
EU Whistleblower Directive
DEFINITION
EU-wide whistleblower protection framework.
MEANING
Mandatory reporting channels.
EXAMPLE
Internal reporting hotline.
F
Forensic Evidence Handling
DEFINITION
Proper collection and preservation of evidence.
MEANING
Ensures legal admissibility.
EXAMPLE
Preservation of server logs.
Fraud Triangle
DEFINITION
The fraud triangle explains fraud through pressure, opportunity, and rationalization.
MEANING
It is a foundational model in fraud prevention and investigation.
EXAMPLE
Financial pressure combined with weak internal controls.
I
Internal Controls
DEFINITION
Internal controls are processes designed to ensure reliable operations and compliance.
MEANING
They are a key element in fraud prevention.
EXAMPLE
Segregation of duties in payment approval.
Internal Investigation
DEFINITION
Structured internal fact-finding process.
MEANING
Key response to misconduct.
EXAMPLE
Review of emails and transactions.
L
Lifestyle Red Flag
DEFINITION
Unexplained personal wealth.
MEANING
Common internal fraud indicator.
EXAMPLE
Luxury lifestyle without income basis.
M
Management Override of Controls
DEFINITION
The deliberate bypassing of established controls by management.
MEANING
It is a high-impact risk because authority and access can neutralize control frameworks.
EXAMPLE
A manager forces an exception payment approval.
O
Occupational Fraud
DEFINITION
Occupational fraud refers to fraud committed by employees, managers, or executives against their employer for personal gain.
MEANING
It is the most common form of economic crime and typically involves abuse of trust, weak internal controls, or access to sensitive systems.
EXAMPLE
An employee diverts company funds by manipulating vendor payment processes.
Occupational Fraud Scheme
DEFINITION
A recurring method used to commit and conceal fraud.
MEANING
Understanding schemes supports prevention and detection.
EXAMPLE
Creating shell vendors and paying fake invoices.
R
Repeat Offender Rate
DEFINITION
Percentage of repeat fraud offenders.
MEANING
Signals systemic weaknesses.
EXAMPLE
Repeat fraud in same unit.
S
Substantiated Case Rate
DEFINITION
Percentage of substantiated cases.
MEANING
Measures investigation quality.
EXAMPLE
40 percent substantiated.
W
Whistleblower Protection
DEFINITION
Legal protection for whistleblowers.
MEANING
Encourages reporting.
EXAMPLE
Protection from retaliation.
Whistleblower Retaliation
DEFINITION
Adverse actions against individuals reporting misconduct.
MEANING
Discourages reporting and detection.
EXAMPLE
Demotion after submitting a tip.
Whistleblower Usage Rate
DEFINITION
Number of reports relative to workforce size.
MEANING
Low rates may indicate fear or mistrust.
EXAMPLE
2 reports per 1,000 employees.
Whistleblowing
DEFINITION
Whistleblowing involves reporting misconduct within an organization.
MEANING
Most fraud cases are detected through tips.
EXAMPLE
Anonymous report via a whistleblower hotline.