Effects Of Financial Statement Fraud
1. Introduction „Fraud is a challenging problem. Its economic effects are clear – worse public services, less financially stable and profitable companies, diminished levels of disposable income for all of us, charities deprived of resources needed for charitable purposes. In every sector of every country, fraud has a pernicious impact on the quality of life“. [1] Financial fraud can be broadly defined as an intentional act of deception involving financial transactions for purpose of personal gain. Fraud is a crime, and is also a civil law violation. Many fraud cases involve complicated financial transactions conducted by 'white collar criminals' such as business professionals with specialized knowledge and criminal intent. Fraudsters can …show more content…
Public and private businesses commit financial statement fraud to secure investor interest or obtain bank approvals for financing, as justification for bonuses or increased salaries or to meet expectations of shareholders. Upper management is usually at the center of financial statement fraud because financial statements are created at the management level. [2] We could definite fraud as: „Аny attempt to deceive another for financial gain. A clear example of fraud is selling a newissue that does not reallyexist. That is, the company can collect money from investors and, rather than use it to finance operations, pocket themoney and do nothing. There are a number of types of fraud. Common types include forgery of documents, falseclaims in insurance, and filing bankruptcy to avoid debt rather than because of financial hardship“.[3]
2. Data from around the world for financial cost of fraud The nine countries in which the authors are aware that fraud loss analysis exercises have taken place are:
…show more content…
The purpose may be to obtain goods without paying, or to obtain unauthorized funds from an account. Credit card fraud is also an adjunct to identity theft. According to the United States Federal Trade Commission, while identity theft had been holding steady for the last few years, it saw a 21 percent increase in 2008. However, credit card fraud, that crime which most people associate with ID theft, decreased as a percentage of all ID theft complaints for the sixth year in a
Barry Minkow Essay
1143 Words | 5 PagesBarry Minkow, at the age of twelve, was introduced to the carpet cleaning world because of his mother who had worked in this industry for his whole life. At the age of thirteen, Barry made his company ZZZZ Best Company in his parent’s garage. His company started out as a small, door-to-door carpet cleaning operation. The carpet cleaning industry was an easy market to get into due to the fact that licensure was not required. This made competition fierce and for a thirteen year old with little finances, his company would soon collapse.
Gilded Age Industrialization And The Panic Of 1873
671 Words | 3 PagesOne example was the Credit Mobilier scandal where major stockholders of the Union Pacific Railroad formed the Credit Mobilier company and sold their shares to influential congressmen. These executives essentially hired themselves and stole taxpayer money, a very lucrative scandal. Scandals like the Credit Mobilier were widespread and executives from many other railroad companies often stole from their own companies. Many executives would manipulate the rail companies' stocks to profit greatly. Executives would often bribe influential politicians, and work together to profit themselves.
Strengths And Weaknesses Of HIPAA System
754 Words | 4 PagesInformation security considered as the procedure of protecting information against unauthorized access, disclosure, disruption, modification, use, or destroyed. In other word information security include defending information whatever the form this data may take. Although each organization employ information security to protect its secret data, but security breaches or identity theft may take place, security breach mean illegal access to defined categories of personal information. In other word it mean illegal access to personal information to use, destroy or amend it (Cate, 2008, p.4).
Bank Of America Fraud Essay
549 Words | 3 PagesBank of America Fraud Case 2013 When one invests their time, money, and life into a business it is expected that everything is told to one and they are not mislead by a company or cooperation. Fraud is when one intentionally withholds information in order to have a positive impact whether it is financially or personally. Bank of America was charged by The Securities and Exchange Commission in 2013 for defrauding investors by not disclosing key risks and misrepresenting facts about underlying mortgages (Sec.gov). I believe that this is unacceptable and that Bank of America should have been straight forward and truthful about each and every account they had.
Five Types Of Identity Theft
4821 Words | 20 PagesIdentity theft is a form of theft when someone assumes another individual’s identity. It is often done so as a modus operandi to gain access to personal information or other benefits from the victim’s name. There are five types of identity theft according to wikipedia which include criminal identity theft, financial identity theft, identity cloning, medical identity theft and child identity theft. The most common type of identity theft is financial identity theft, where someone gains financial access to someone else’s by assuming his/her identity .
Income Smoothing Case Study
1491 Words | 6 PagesThe fraud triangle is made up by three distinguished elements. These elements in the fraud triangle consist of pressure, opportunity, and rationalization. The overall representation of the fraud triangle can be seen as the specific model to spot any type of high-risk unethical and fraudulent performances being conducted by a company, in this case Cendant Corporation. Cedant Corporations actions can be analyzed by the fraud triangle by the way that their senior management/top management decisions fell into the three categories of pressure, rationalization, and opportunity. Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image.
Dick Hickock: A Teen Psychopath For The Massacre
336 Words | 2 PagesEric Harris a teen psychopath that did not have plans for the future other than for the massacre. Dick Hickock was also a psychopath that had a criminal record, which consisted of bad checks and petty theft. The motives, the ways of manipulation, and the faults in their plans are a few things that make Eric and Dick different. Eric Harris did not have any plans for the future. He wanted to be kown by something big.
What Is Deception In Macbeth
656 Words | 3 PagesDeception Trickery and Mischievous Deception is the act of making someone believe something that is not true. Almost everyday if you truly look you can see that deception is everywhere. Whether to a best friend or a family member deception is constantly present. In many cases we never actually recognize the fraud of the scheme this person played until after we look at the bigger picture and see that they are not who we think they are. On perfect example of this is William Shakespeare's play Macbeth.
Describe The Rationalizations Used By Mr Pavlo
425 Words | 2 PagesHe also rationalized his fraudulent activities by hiding the customer’s late payment in order to be benefitted himself, but said that he was helping people more than he was helping himself. 2. Given that Mr. Pavlo’s fraud was restricted to an accounts receivable embezzlement scheme, what symptoms might auditors observe?
The Theme Of Deception In The Crucible
711 Words | 3 PagesThemes in The Crucible Themes play a big part in the lives of those in the real world , and those in the fiction world. The Crucible is a play that displays many themes through a variety of characters , and not one character in this play shows just any one theme there are multiple. The Crucible has many characters that play enormous roles that affect everything around them due to the theme of deception. Followed by the theme of integrity ,and the theme of reputation.
Rational Choice Theory: Why Do People Commit Crimes
912 Words | 4 PagesWhite collar crime is an organized crime committed by person of higher socioeconomic status in the course of their business, occupation, or profession (Sutherland, 2002). It was introduced to the Criminal Justice system in 1939, but was overlooked by many people because they never noticed it was happening. White collar crime has been taking place in America for a long time and is summed up as lying, cheating and stealing. There are numerous types of white collar crimes such as bribery, bank fraud, embezzlement, and insurance fraud to name a few (National Check Fraud Center, 2011). One case that we all know of, Enron, not only wiped out lifesavings, but cost investors billions of dollars.
Lehman Brothers: Financial Fraud In 2008
2178 Words | 9 PagesExecutive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.
Ethical Issues In Waste Management
1009 Words | 5 PagesThe false accounting records were unethical because it means management was enriching themselves. They were getting earnings based on the false availability of funds. They also did this to keep their jobs. When a company is not performing financially well the top positions are the ones usually at risk of being retrenched, as a result of implying the company was financially stable they were protecting their jobs. False accounting also results in duping investors that trust the financial records of the company.
Tesco Accounting Report
1656 Words | 7 PagesIntroduction The main objective of the paper is to develop a report for a shareholder that will interpret financial statements of Tesco Plc. for 2013-2014. The shareholder is specifically concerned about the fraudulent reporting. In this way, the paper will explain the reason of income statement and statement of financial position.
The Worldcom Fraud Case
2107 Words | 9 PagesThis three element fraud is often referred as a fraud triangle by the researchers (Cohen, Ding, Lesage & Stolowy, 2010, p. 276). On the other hand the theory of planned behavior focuses on the intentions behind the planned behavior. Ajzen (1991, p. 188) explains this as “attitude toward the behavior… refers to the degree to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question”. Cohen, Ding, Lesage & Stolowy (2010) have combined the fraud triangle and theory of planned behavior to understand that how the two theories can be collectively studied to find out the reasons behind the unethical activities that results in corporate frauds. Cohen, Ding, Lesage & Stolowy (2010) in their work studied various organizations including WorldCom and identified following: • WorldCom’s management had an excessive interest in maintaining the entity’s stock price and earning trends (p. 287).
More about Effects Of Financial Statement Fraud
Barry Minkow Essay
1143 Words | 5 PagesGilded Age Industrialization And The Panic Of 1873
671 Words | 3 PagesStrengths And Weaknesses Of HIPAA System
754 Words | 4 PagesBank Of America Fraud Essay
549 Words | 3 PagesFive Types Of Identity Theft
4821 Words | 20 PagesIncome Smoothing Case Study
1491 Words | 6 PagesDick Hickock: A Teen Psychopath For The Massacre
336 Words | 2 PagesWhat Is Deception In Macbeth
656 Words | 3 PagesDescribe The Rationalizations Used By Mr Pavlo
425 Words | 2 PagesThe Theme Of Deception In The Crucible
711 Words | 3 PagesRational Choice Theory: Why Do People Commit Crimes
912 Words | 4 PagesLehman Brothers: Financial Fraud In 2008
2178 Words | 9 PagesEthical Issues In Waste Management
1009 Words | 5 PagesTesco Accounting Report
1656 Words | 7 PagesThe Worldcom Fraud Case
2107 Words | 9 Pages