Basics of Fraud
What is fraud?
This word means lying or cheating in business to get money.
What is theft?
Taking money straight from the cash register is this kind of fraud.
BONUS
BONUS
What is an audit?
This is a check of company accounts to stop fraud.
Why can fraud reduce investor trust in a company?
Because investors lose confidence when financial statements are false, so they may stop giving money.
What is one short-term benefit companies think they gain from fraud?
They may show higher profits than reality to look successful.
What is one long-term consequence of fraud?
The company can face big losses, penalties, or even bankruptcy.
Why is fraud called a “false profitability”?
Because it looks like profit on paper, but in reality, the company is losing money.
Why can fraud cause employees to lose their jobs, even if they didn’t commit it?
Because fraud can damage the whole company, leading to layoffs or closure.
How can fraud affect a country’s economy?
It reduces tax payments and weakens trust in businesses.
Why is it difficult to hide fraud forever?
Because financial records and audits usually reveal the truth.
What is the difference between “small fraud” and “large fraud” in terms of risk?
Small fraud may go unnoticed for a while, but large fraud is easier to detect and brings bigger punishment.
How can fraud inside one company affect other businesses in the same industry?
It makes people lose trust in the whole industry, not just one company.
Why is employee education important in preventing fraud?
Because trained workers know how to spot and report suspicious activities.
What is “ethical culture,” and how does it help stop fraud?
It means the company promotes honesty and responsibility — so employees don’t feel pressure to cheat.
Why is regular auditing important for preventing fraud?
It helps discover errors or lies before they become serious problems.
Why might a company still commit fraud even if it knows the risks of getting caught?
Because short-term profits or pressure to show success can feel more important than long-term honesty.
How can corporate culture indirectly encourage fraud even without directly telling employees to cheat?
If leaders only reward profits and ignore ethics, employees feel pressure to do anything to meet goals.
What’s the difference between intentional fraud and human error, and why does it matter legally?
Intentional fraud is done on purpose to deceive, while errors are mistakes — only fraud brings legal punishment.
Why is reputation considered one of the biggest losses a company faces after fraud?
Because once people lose trust, even money and apologies can’t easily fix the company’s image.