Predication
Definition
The reasonable basis that justifies opening a fraud examination. The ACFE holds that no examination should begin without adequate predication, meaning a fact, circumstance, or allegation that would lead a reasonable, professionally trained person to believe a fraud may have occurred. Without predication, an examination risks harming innocent people and may be legally impermissible.
- Field
- Fraud examination
- Governing body
- Association of Certified Fraud Examiners (ACFE)
- Definition core
- A reasonable basis to believe fraud may have occurred
- Consequence of skipping it
- Risk of harming innocent people, possible legal exposure
Common questions
What counts as adequate predication?+
A specific fact, circumstance, or credible allegation, such as an unexplained account discrepancy or a whistleblower report, that would lead a reasonable trained examiner to suspect fraud. A vague suspicion or personal dislike of an employee does not meet the standard.
Why does predication matter before starting an examination?+
Fraud examinations can damage careers and reputations even when no wrongdoing is found. Requiring predication first keeps examinations grounded in evidence rather than hunches, and protects the examiner from claims of harassment or defamation if the allegation turns out to be false.
Related terms
- Chain of Custody
- The documented chronological record of who collected, handled, transferred, and examined a piece of evidence. For digital evidence, chain of custody includes...
- Fraud Triangle
- A model, developed by criminologist Donald Cressey, proposing that occupational fraud requires three converging conditions: pressure (financial need or incentive), opportunity (a...
- Spoliation
- The destruction, alteration, or concealment of evidence relevant to a legal proceeding. Spoliation can result in adverse inference instructions to a jury,...
- ACFE Fraud Examiners Manual
- The comprehensive reference published by the Association of Certified Fraud Examiners that defines the body of knowledge for the CFE credential. Covers...
- Asset Misappropriation
- The largest Fraud Tree branch, covering schemes in which an employee steals or misuses the organisation's assets. Subcategories include cash schemes (skimming,...
- Audit Committee Referral
- A mandate from the board's audit committee to conduct a forensic investigation. Because the audit committee is independent of management, this pathway...
- Benford's Law Analysis
- A data analytics technique based on the observed distribution of leading digits in naturally occurring financial data. Significant deviations from the expected...
- Certified Fraud Examiner (CFE)
- A professional credential awarded by the ACFE. It demonstrates competency across four domains: financial transactions and fraud schemes, law, investigation, and fraud...
- Chartered Accountant (CA)
- A professional accounting designation awarded by bodies such as ICAI (India), ICAEW (UK), ICAS (Scotland), ICAZ (Zimbabwe), and equivalent national institutes. CA...
- Engagement Partner
- The senior professional who holds overall responsibility for a forensic audit engagement, manages the relationship with the client and legal counsel, reviews...
- Engagement Scope
- The defined boundaries of a fraud examination: the organisational units, time period, transaction types, and evidence sources to be examined. Scope is...
- Engagement Trigger
- The event, report, or observation that initiates a forensic audit engagement. Common triggers include whistleblower reports, regulatory referrals, audit anomalies, and management...
Explained in these topics
- Engagement Triggers and Referral PathwaysThe totality of circumstances that give a forensic auditor a reasonable basis to believe that fraud or misconduct may have occurred, sufficient to justify comm...
- Evidence Gathering Methods in Fraud ExaminationsThe factual basis that justifies opening a fraud examination. Without a legitimate predicate, an examiner has no mandate to gather evidence and any evidence co...
- Forensic Auditing: Definition and ScopeThe totality of circumstances that would lead a reasonable, professionally trained person to believe a fraud has occurred, is occurring, or will occur. Under t...
- Legal and Regulatory Framework for Forensic AuditsThe totality of circumstances that would lead a reasonable, professionally trained person to believe fraud has occurred, is occurring, or will occur. Required...
- Predication and Engagement Planning in Fraud ExaminationsThe totality of facts, circumstances, and allegations that would lead a reasonable, professionally trained person to believe a fraud may have occurred, is occu...
- Roles and Qualifications of Forensic Auditors
- The Fraud Triangle: Pressure, Opportunity, and RationalisationThe totality of circumstances that gives a fraud examiner a reasonable basis for suspecting fraud has occurred. In the context of the fraud triangle, predicati...