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Nicholls State University

Internal Audit Department

Regardless of the definition used, certain characteristics are common to fraud, including:

Misrepresentation of a material fact

  • Made knowingly and with the intent to deceive
  • Reliance on the misrepresentation by the victim
  • Resulting in injury or damage from such reliance

The perpetrator’s intent to deceive is usually the hardest element of a fraud to prove.  The following are examples which have been used to prove an intent to deceive:

Admissions

  • Alteration of documents
  • Concealment of evidence
  • Confessions
  • Destruction of evidence
  • False statements (lies)
  • Obstruction of justice
  • Pattern of conduct (repetition of behavior)
  • Personal gain
  • Testimony of a co-conspirator

“Ordinary” people commit frauds.  Typically, the “ordinary” person has a “pressure” in his/her life (e.g. financial crisis, large gambling debts, or high medical bills).  Then, he/she seizes a perceived “opportunity” to alleviate the pressure (e.g. the combination is taped to safe’s door, or no one ever reviews my work).  Afterwards, he/she rationalizes the fraud he/she committed (e.g. they don’t pay me enough, I’ll pay it back, or I deserve a raise).

Characteristics of Fraud