Glossary

False billing is a scheme in which fake, inflated or duplicate invoices are submitted to obtain payment for supplies that were never delivered or were worth far less than billed.

A false negative is a case where a test, model or control says nothing is wrong when something actually is, so a real problem goes undetected.

A false positive is an alert raised by a test, model or control when nothing is actually wrong, which costs reviewers time and can delay legitimate activity.

Fault tree analysis starts from one undesired event and works backwards, using logic gates to map every combination of faults that could cause it.

Financial materiality is the test of whether a sustainability matter could reasonably affect a company’s cash flows, access to finance or value, and therefore whether investors would want to know about it.

Financial risk is the possibility of losing money or value through the way an organisation lends, invests, trades or funds itself. Credit, market and liquidity risk are its main forms.

Financial sanctions are legal restrictions on financial dealings with a target, such as freezing assets, banning loans or investment, or cutting off access to banking and capital markets.

Financial statement fraud is the deliberate misstatement or omission of figures or disclosures in a company's accounts to mislead investors, lenders, regulators or other users about its real performance or position.

Foreign exchange risk is the chance of gain or loss from changes in exchange rates, affecting the value of money received or owed in a foreign currency, or of assets and liabilities held abroad.

Forgery is the making, altering or using of a false document, signature or object so that it appears genuine, with the intention of deceiving someone or causing a loss.

Fourth-party risk is the risk that comes from the subcontractors and suppliers a firm's own vendors rely on, with whom the firm has no contract and often little visibility.

Fraud is dishonest deception, by a false statement, concealment or abuse of position, carried out to gain money or advantage for oneself or others, or to cause loss to another.

Fraud awareness training teaches staff, agents, customers or the public how fraud schemes work, what warning signs look like and how to report concerns, so that fewer deceptions succeed.

Fraud detection is the process of identifying suspected fraudulent activity after or while it happens, using rules, statistical models, data analysis, alerts and human reports, so that cases can be investigated.

A fraud risk assessment is a structured exercise that identifies where and how fraud could occur in an organisation, rates the likelihood and impact, and tests whether existing controls address those risks.