Fraud encompasses an array of irregularities and illegal acts characterized by intentional deception. It usually involves the deliberate concealment of facts. Fraud can be defined in a number of ways, including the following:
Fraud is the intentional misrepresentation or concealment of a material fact that results in financial or other damages to another party.
Fraud is the use of deception, false suggestions, suppression of the truth, or other unfair means, which is believed and relied upon to deprive another of property or money, resulting in a loss to the party that believed and relied upon such.
Fraud is an illegal act characterized by deceit, concealment or violation of trust committed by individuals and organizations to obtain money, property or services, avoid payment or loss of services, or to secure personal or business advantage.
Fraud is the intentional deception perpetrated by individuals or organizations, either internal or external to the organization, which could benefit themselves, others, or the organization or which could cause detriment to others or the organization, including falsifying financial or other records to cover up the theft of money or other assets.
Regardless of the definition used, certain characteristics are common to fraud, including:
Misrepresentation of a material fact
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:
"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).
Altering documents (changing an actual document), including cash receipts, checks, expense reports, and time sheets
Alumni Affairs / Development
Overstating amounts of gifts received
Create fake vendors to receive payments
Inflate check amounts to payees
Improper sale of
Personal use of
Falsifying documents (creating a fictitious document), including cash receipts, checks, expense reports, and time sheets
Forging signatures on documents, including cash receipts, checks, expense reports, and time sheets
Grants and Research
Improper charges to
Keeping research checks
Intellectual Property (creations of the mind, such as patents, copyrights, and trademarks)
Conflict of interest
Improper sale of
Theft of inventory items
Theft of scrap or surplus
Misappropriation of assets, including cash, equipment, property, and supplies
Gifts to management and other personnel
False accounting records
Creating fictitious employees
Inflating hours worked (padding the payroll)
Keeping former employees on the payroll
Theft of time
Purchase of inferior products
Purchase of personal items
Theft of assets, including cash, equipment, property, and supplies
Use of State property for personal gain
Fraud can be very expensive in terms of monetary losses, loss of public trust, negative publicity, and potential litigation. It is very difficult to quantify the monetary losses associated with fraud, because not all fraud is known about. As such, it is imperative that all employees strive toward the prevention of fraud at the University.
Certain areas and transaction types are more susceptible to fraud than others, having an above average potential for fraud to exist. Examples of such areas and transaction types are as follows:
Cash handling and collection points
Computer and telecommunication access
Credit card usage
Disbursements / payables
Surplus or scrap material
Temporary or casual employees
Third party contracts
Asset misappropriations - The theft or misuse of an organization's assets
Bribe - A payment made to influence someone to do something that should not be done or to omit to do something that should be done under the rules governing the procurement
Check tampering - A disbursement fraud scheme whereby an individual either prepares a fraudulent check for his own benefit or intercepts and cashes a check intended for a third party
Collusion - A secret agreement between two or more parties for fraud or deceit
Conspiracy - Is an agreement by two or more individuals to commit an unlawful act, or to commit a lawful act for unlawful purposes or by unlawful means
Corruption - A fraud in which perpetrators wrongfully use their influence in a business transaction in order to obtain some benefit for themselves or another person, including kickbacks, other gifts and gratuities, or engaging in conflicts of interest
Embezzlement - To take assets in violation of trust
Forgery - The false making or altering, with the intent to defraud, of any signature to, or any part of, any writing purporting to have legal efficacy; Issuing or transferring, with the intent to defraud, a forged writing, known by the offender to be a forged writing, shall also constitute forgery
Kickbacks - Any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind that is provided for the purpose of improperly obtaining or rewarding favorable treatment in connection with a contract. This prohibition extends to members of the employee's immediate family.
Kiting - Drawing a bank check on insufficient funds to take advantage of the time interval required for collection
Lapping - A scheme to cover an embezzlement by using payments made by one customer to reduce the account balance of another customer, i.e. recording a payment on a customer's account sometime after the payment has been received
Larceny - The intentional taking away of an employer's cash (currency and checks) without the consent and against the will of the employer, involving the theft of money that has already appeared on a company's books, i.e. "on-book" fraud
Skimming - The process by which cash is removed from the company before it enters the accounting system, including unrecorded sales, understated sales, theft of incoming checks, and swapping checks for cash, i.e. is an "off-book" scheme because the receipt of cash is never reported to the company
Theft - The misappropriation or taking of anything of value which belongs to another, either without the consent of the other to the misappropriation or taking, or by means of fraudulent conduct, practices, or representations (an intent to deprive the other permanently of whatever that was misappropriated or taken is essential)
Click the icon to find out how you can report suspected fraud, waste and abuse to the Louisiana Legislative Auditor.