You are usually shocked and incredulous when fraud is discovered in a company. Fraud is a very general term that refers to deliberate deception to secure an unfair or illicit gain. Fraud involves theft that the perpetrator often tries to hide (Farrell and Franco 1999). The offender then attempts to transfer the stolen property or resources into personal property or resources (Farrell and Franco 1999). In general, financial fraud is composed of four broad categories consisting of fraudulent financial reporting, misappropriation of assets, expenses and liabilities for inappropriate intentions, and fraudulently obtained income and assets that include avoided costs and expenses (PricewaterhouseCoopers 2008). A company that tries to prevent fraud avoids a catastrophic risk. A culture of honesty and ethics, anti-fraud processes and controls, and an adequate oversight process are best practices for preventing and detecting fraud. In 2002, after a chain of highly publicized corporate scandals, Congress passed the Sarbanes-Oxley Act, intending to restore investor confidence in publicly traded securities. Traditionally, management and the board of directors were responsible for running the company and preparing the financial statements. However, this new law clarifies that they are also responsible for creating, confirming and supervising effective internal controls to avoid fraudulent financial reporting. When fraudulent financial statements occur, you are expected to detect them in a timely manner. (PricewaterhouseCoopers, 2003) Common problems considered to be major factors allowing fraud to occur are a lack of internal controls and internal controls being ignored by... middle of paper......s/ view.asp? ArticleID=638 > (March 5, 2011)Association of Certified Fraud Examiners. 2008. “ACFE Fraud Prevention Check-up.” (March 5, 2011).Association of Certified Fraud Examiners. 2010. “Report to the Nations on Fraud and Abuse at Work.” < http://www.acfe.com/rttn/rttn-2010.pdf > (5 March 2011).Farrell, Barbara R. and Joseph R. Franco. 1999. “The Auditor's Role in Preventing and Detecting Corporate Fraud: SAS No. 82.” Western Criminology Review 2/1/ [Online]. Available: http://wcr.sonoma.edu/v2n1/v2n1.html. (March 5, 2011). PricewaterhouseCoopers. 2003. “Key Elements of Anti-Fraud Programs and Controls.” [Online].Available: http://www.som.yale.edu/faculty/Sunder/FinancialFraud/Elements%20of%20Antifraud%20Program%20-%20White%20Paper.pdf. (March 5 2011).