Legal and Ethical Environment
Expert-defined terms from the Certified Professional in Forensic Accounting and Fraud Prevention course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Acceptance Sampling #
A statistical quality control technique where a sample is drawn from a population and the decision to accept or reject the population is based on the sample data.
Admissible Evidence #
Evidence that is allowed to be presented in a court of law, based on its relevance and reliability.
Affirmative Action #
A proactive measure taken by an organization to ensure equal opportunity and treatment for all employees, regardless of race, gender, age, or disability.
Agent #
Principal Relationship: A legal relationship between two parties, where one party (the agent) is authorized to act on behalf of another party (the principal).
Anti #
Money Laundering (AML): A set of procedures, laws, and regulations designed to prevent and detect money laundering activities.
Audit Committee #
A committee of the board of directors responsible for overseeing the financial reporting process, internal controls, and independent auditor relationships.
Bribery #
The act of offering, giving, receiving, or soliciting something of value in exchange for influence or action in a business or government context.
Business Ethics #
The moral principles and values that guide the conduct of a business and its employees.
Code of Ethics #
A set of principles and guidelines that outline the expected behavior and values of an organization and its employees.
Commercial Reasonableness #
A legal standard used to determine if a business transaction is fair and just.
Common Law #
A legal system based on court decisions and precedents, as opposed to statutes or codes.
Computer Fraud #
The use of computers and technology to commit fraud, such as hacking, phishing, and identity theft.
Conflict of Interest #
A situation where an individual's personal interests or loyalties conflict with their professional duties or responsibilities.
Consent #
The voluntary agreement of a competent individual to a proposed action or decision.
Corporate Governance #
The system of rules, practices, and processes by which a company is directed and controlled.
Corporate Social Responsibility (CSR) #
A self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public.
Crime #
An act that is prohibited by law and punishable by sanctions.
Criminal Law #
The body of law that deals with crimes and their punishment.
Data Privacy #
The protection of personal information and data from unauthorized access, use, or disclosure.
Deceptive Trade Practices #
Unfair or fraudulent business practices that deceive or mislead consumers.
Digital Forensics #
The process of collecting, analyzing, and preserving electronic evidence in a manner that is legally admissible.
Direct Evidence #
Evidence that directly proves a fact, without the need for inference or interpretation.
Disclosure #
The act of making information or facts known to others.
Due Diligence #
The process of investigating and evaluating a potential business transaction or investment to ensure its legitimacy and viability.
Embezzlement #
The act of misappropriating funds or assets that have been entrusted to an individual.
Enterprise Risk Management (ERM) #
The process of identifying, assessing, and mitigating risks to an organization's operations, assets, and reputation.
Evidence #
Information or facts presented in a legal proceeding to prove or disprove a point.
Exclusionary Rule #
A legal principle that prohibits the use of illegally obtained evidence in a court of law.
Expert Witness #
A witness who has specialized knowledge or skill in a particular area and is called to testify in a legal proceeding.
Fiduciary Duty #
A legal obligation to act in the best interests of another party, typically in a financial or business context.
Fraud #
The intentional deception or misrepresentation of facts for personal gain or to harm others.
Fraudulent Conveyance #
The transfer of assets or funds with the intent to defraud creditors or avoid payment of debts.
Free Exercise Clause #
A provision of the First Amendment to the US Constitution that guarantees the right to freedom of religion.
Generally Accepted Accounting Principles (GAAP) #
A set of rules and guidelines that govern financial reporting and accounting practices in the US.
Insider Trading #
The illegal practice of trading securities based on material, non-public information about a company.
Intellectual Property (IP) #
Creations of the mind, such as inventions, literary and artistic works, symbols, names, images, and designs, that are protected by law.
Internal Controls #
Processes and procedures designed to ensure the accuracy, reliability, and integrity of financial and operational information.
International Financial Reporting Standards (IFRS) #
A set of accounting standards used by companies around the world to prepare and present their financial statements.
Jury Nullification #
The power of a jury to acquit a defendant, even if they believe the defendant is guilty, based on their own conscience or sense of justice.
Legal Liability #
The legal responsibility for one's actions or omissions, and the potential for legal consequences such as fines, damages, or imprisonment.
Litigation #
The process of resolving disputes through the court system.
Mens Rea #
The mental state or intent required for the commission of a crime.
Money Laundering #
The process of making illegally-gained proceeds appear legitimate through a series of transactions or financial maneuvers.
Negligence #
The failure to exercise reasonable care, resulting in harm or damage to another party.
Perjury #
The act of lying under oath in a legal proceeding.
Privilege #
A legal right or immunity that protects certain communications or relationships from disclosure in a legal proceeding.
Probable Cause #
A reasonable belief, based on objective facts, that a crime has been committed or that evidence of a crime will be found.
Prosecutorial Discretion #
The power of a prosecutor to decide whether or not to bring charges against a suspect, and what charges to bring.
Qui Tam Lawsuits #
Lawsuits brought by private citizens on behalf of the government, alleging fraud or other illegal activities.
Regulation FD #
A Securities and Exchange Commission (SEC) rule that requires publicly traded companies to disclose material information to all investors at the same time.
Res Ipsa Loquitur #
A legal doctrine that allows a plaintiff to infer negligence based on the circumstances of an incident, without direct evidence of the defendant's actions or intent.
RICO Act #
The Racketeer Influenced and Corrupt Organizations Act, a federal law that provides for criminal penalties and civil remedies for racketeering activity.
Securities Fraud #
The illegal manipulation or misrepresentation of financial securities, such as stocks, bonds, or mutual funds.
Standard of Care #
The degree of care that a reasonable person would exercise in a similar situation.
Statute of Limitations #
The time period within which a legal action must be brought, or it will be barred by law.
Statutory Law #
Laws that are enacted by a legislative body, such as a Congress or state legislature.
Subpoena #
A legal document issued by a court or other competent authority, commanding a person to appear and give testimony or produce evidence.
Testimonial Privilege #
A legal privilege that allows a witness to refuse to testify about confidential communications made to them.
Tort Law #
The body of law that