The name of the class is "Legal Elements of Fraud"Assignment:Purpose To discuss the legal issues...

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The name of the class is "Legal Elements of Fraud"Assignment:Purpose  To discuss the legal issues and factors in a fraud investigation.  Action Items  1.  Review the assigned readings for Week 1 (All the assigned readings are attached). 2.  For each statementbelow, determine if you agree or disagree with the statement, and justify your decision by writing a 2-3 paragraph response. (Note: Each statement requires a 2-3 paragraph justification.)     a. “Most frauds are not prosecuted because they are  immaterial in amount.”  b. “Inadequate internal controls provide the reason why  most fraud is committed.”  c. “Keep your fraud investigations internal because  bringing in anyone external to the organization might tip off the suspect  that they’re being investigated.”  d. “Once you believe you’ve found the fraud perpetrator,  the best thing to do is to fire the person to prevent him/her from  continuing the fraudulent activities.”  e. “It doesn’t matter if the company or the attorney  hires a CPA or a professional investigator for a suspected fraud  investigation. The attorney-client privilege applies in either case.”  
	
Document Preview: Basic Legal Concepts.Authors:Lawrence, G. Michael1,2  XXXXXXXXXXWells, Joseph T.3  XXXXXXXXXXSource:Journal of Accountancy. Oct2004, Vol. 198 Issue 4, p33-35. 3p.Document Type:ArticleSubject Terms:*Fraud*Commercial crimes*AccountantsCommon lawCriminal procedureNAICS/Industry Codes:541211 Offices of Certified Public Accountants541212 Offices of accountants541219 Other Accounting ServicesAbstractThis article summarizes the basic common-law concepts of fraud. Under common law, three elements are required to prove fraud: a material false statement made with an intent to deceive (scienter), a victim's reliance on the statement and damages. For certified public accountants (CPA) materiality is a familiar concept. Generally speaking, a transaction is material if prior knowledge would have changed the outcome of the investor's decision to part with money. There is no such thing as an accidental fraud. What separates error from fraud is intent, the accidental from the intentional. The motive for fraud is a strong circumstantial element. Frauds, whether involving asset misappropriations or fraudulent financial statements, usually are not single acts. Circumstantial evidence rarely can be sufficient without the statements of witnesses. Even when there is a material false statement and the intention to deceive can be proved, it does not meet the legal test for fraud unless there is a victim who relied on the false statement. The final legal element of fraud concerns damages--usually in terms of money. There are two major types of damages: actual and punitive. The CPA will assist the attorney in determining actual damages; the judge and jury will assess other damages, subject to statutory limitations.Author Affiliations:1Principal of G. Michael Lawrence, PC, Austin, Texas2Advisory member, Association of Certified Fraud Examiners' Board of Regents3Founder and chairman, Association of Certified Fraud ExaminersFullBasis Legal...

Robert · Accepted Answer

1. “Most frauds are not prosecuted because they are immaterial in amount.” 
Agree 
Under common law, three elements are required to prove that fraud has occurred. A material 
misstatement is one of them (Other two are victim’s reliance and damage).  
A material misstatement is one, if prior knowledge would have changed the outcome of the 
investor's decision to part with money. This material misstatement can be due to error or 
intentional. Frauds, whether involving asset misappropriations or fraudulent financial 
statements, usually are not single acts and errors are generally one off entry.
2. “Inadequate internal controls provide the reason why most fraud is committed.” 
Disagree 
Inadequate internal controls don’t provide the reason for committing fraud. The statement 
ignores an understanding of human behavior which is “motive”. Fraud get easier when 
internal control are absent as presence of internal control work as deterrence. So, fraud does 
not occur because of absence of internal control but due to a motive, which he defined as 
being usually a hidden or “un-shareable” financial need. 
Fraudster must have a motive to do the fraud. In most cases of fraud, someone in financial 
difficulty or looking for high profits,

The name of the class is "Legal Elements of Fraud" Assignment: Purpose To discuss the legal issues and factors in a fraud investigation. Action Items 1. Review the assigned readings for Week 1 (All...

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