What Are Five Elements Necessary For Commit Fraud?

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Introduction Elements There are five elements needed to commit fraud: (1) a false statement containing material fact, (2) the defendant possesses the knowledge that the statement is untrue, (3) the false statement’s intent is to deceive the intended victim, (4) the intended victim justifiably relies on the statement, and (5) the ending result is financial injuries to the intended victim. All false statements do not constitute for fraud; they need to contain a material fact. The materiality of the statement induces the intended victim to agree to something with the defendant. Statements of belief (puffing) are not considered fraudulent since there is no legitimate statement of fact. For example, Joe goes to buy a car and the dealer…show more content…
Fraud knowledge benefits stakeholders in multiple ways. By understanding how financial statement fraud occurs, stakeholders can recognize red flags in financial statements. Outside accounting, fraud knowledge enables stakeholders to be productive members of a corporate governance. Corporate governances work as principal catalysts for stakeholders to raise corporate awareness and expectations regarding appropriate behavior and practices. Stakeholders use their fraud knowledge to contribute to the company’s Code of Conduct and Code of Ethics for management and employees as well as participate in risk mitigation efforts. Stakeholders can also participate in boards that create programs that focus on the prevention, detection, and deterrence of criminal and fraudulent acts. The goal of the programs is to ensure that everyone is making ethical decisions and reporting policies that are not followed. Maintaining corporate ethics is critical to company success (Managing the Business Risk of Fraud: A Practical Guide n.d.) Theories of Crime Causations There are three documented theories of crime causations: (1) the strain theory, (2) the control theory, and (3) the social learning theory. However, there are also biological causation of crimes which are further broken down into psychological, economic, and political theories. Understanding the sociological causes of why someone commits fraud helps fraud investigators and
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