Question

In the course of their work, internal auditors must be alert for fraud and other forms of white-collar crime. The important characteristic that distinguishes fraud from other varieties of white-collar crime is that?

1) Fraud is characterized by deceit, concealment, or violation of trust.
2) White-collar crime is usually perpetrated by outsiders to the detriment of an organization, but fraud is perpetrated by insiders to benefit the organization.
3) Unlike other white-collar crimes, fraud is always perpetrated against an outside party.
4) White-collar crime is usually perpetrated for the benefit of an organization, but fraud benefits an individual.

Answer 1

The distinguishing feature of fraud from other white-collar crimes is that it involves deceit, concealment, or a violation of trust, not necessarily perpetrated by insiders nor does it always benefit the organization, but often the individuals involved.

Step-by-step explanation:

Distinguishing Characteristics of Fraud

The important characteristic that distinguishes fraud from other forms of white-collar crime is that fraud is characterized by deceit, concealment, or violation of trust. While white-collar crimes can include a variety of illegal acts committed in a business environment, such as embezzlement and insider trading, fraud specifically involves trickery or dishonesty for personal or financial gain.

Fraud can be perpetrated by both insiders and outsiders to an organization, contrasting with the idea that only insiders can commit fraud. Additionally, fraud does not exclusively benefit the organization; it often benefits the individuals perpetrating the act at the expense of the organization or others. This is evidenced by cases like Bernie Madoff's Ponzi scheme, in which individual gain came at a tremendous loss for many victims.

On the other hand, some white-collar crimes committed by persons of significant social status receive disproportionately lenient legal consequences, contradicting the assertion that such crimes are not considered severely harmful. Yet their impact can have far-reaching and devastating effects on a societal scale.