...Fraud Prevention and Management Recommendations The purpose of this Fraud Prevention Plan is to set out the approach to dealing with fraud risk within our organization. In order to prevent the types of frauds that have already occurred within our organization it will be necessary to create “a culture of honesty, openness, and assistance…..fraud prevention is where the big savings occur” (Albrecht, Albrecht, Albrecht, & Zimbelman, 2012, p.103). What is required is the implementation of a comprehensive hiring, fraud, and ethics training program with strong controls, with punitive treatment of fraud offenders. “Research confirms that anyone can commit fraud. Fraud perpetrators usually can’t be distinguished from other people on the basis of demographic or psychological characteristics.” (Albrecht et al. 2012, p. 33). The value of an effective fraud prevention program requires several components. The lack of fraud prevention leads to enormous risk. The corporation will need to install processes and controls to ensure that honest people are hired. When candidates are going through our interview process they will need to be thoroughly vetted on the accuracy of their work history, education, and stated accomplishments. In addition to the standard practiced of contacting references provided by the candidate, these referenced individuals will be asked to provide additional references. The result of checking references provided by the initial reference will in many instances...
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...Effect of Unethical Behavior Article Analysis Prior to 2002, there were no major regulations that were enforced to maintain lawful ethical accounting practices. Since this was the case, there were no internal controls and thus was a leading cause that enable large corporation to commit fraud by altering books to show more profitability. Due to the overstating of profit in these large companies, investors were provided false information which made their want to invest in these corporations more. An example of a corporation that did this was Enron. Enron Corporation was an American energy company that was based in Houston, Texas. It was one of the world’s leaders in electricity, natural gas, pulp and paper, and communications. Enron reported financial conditions were sustained by systematic and planned accounting fraud. There were several reports that involved irregular accounting procedures which bordered on fraud. These reports were between Enron and their accounting firm, Arthur Andersen. Enron’s stock eventually plunged from $90 a share to $.30 a share. What was once considered a great stock was now a disastrous even in the financial world. All of this was brought to a head when Enron revealed that much of its profits were the result of deals with special purposes entities (Davis, Donna. 2011). Therefore the results were the any debts or losses that Enron suffered were not reported on financial statements. These unethical practices...
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...1. David Miller is not unique in that he fits the profile of most white collar criminals. White collar criminals look like everyone else in the business world, some are well liked and they seem to be ideal employees. They work long hours and never take vacation but they are most likely working on the constant struggle to conceal their fraud. It is for these reasons that it made Mr. Miller hard to detect. His employers thought he was putting in the extra mile when he would work long hours and he was said to do outstanding work. Most of this was most likely a ploy to cover his tracks. This coupled with Mr. Miller being a very likeable person proved to make his transgressions very hard for his employers to detect. 2. Mr. Miller committed the various fraud schemes by stealing money from his employers through forged checks. In order to forge the checks, Mr. Miller himself would sign the checks or he would trick colleagues into signing their names to checks requiring two authorizing signatures. He would do this by asking them to sign the checks just in case the company needed to authorize a payment while they were on vacation. In order to conceal the fraud, Mr. Miller would retrieve the canceled checks from the bank reconciliation and destroy the canceled checks he used to siphon money. The amount stolen was charged to a business unit’s expense account in order to balance the company’s books. Since Mr. Miller was stealing the money through forges checks, he would simply deposit...
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...to remain on the system indefinitely and receive. Some feel that welfare is necessary to help those who cannot help themselves, to allow them a better quality of life with the main goal of assisting the children of needy parents. In 2008, FamilyFacts.org reported that $714 billion was spent on welfare. This included $42 billion for housing, $63 billion on food, $154 billion in cash aid, $372 billion in medical care, and $83 billion on other expenses. Many others feel that welfare distributes wealth to those who don’t earn it. To them, welfare encourages illegitimate births, the breakup of families, and discourages recipients from bettering themselves (Mankiw, p.429). Welfare provides the means for a lazy society that is dependent on hard working citizens for their support. Welfare provides the basic needs and allows for a better quality of live that protects the children from hunger and homelessness. The parents of these children often qualify because their income is at or below poverty level and they have met their state’s requirements to receive any benefits. But instead of the system being a temporary crutch, the system allows recipients to grow dependent on welfare and increases their incentive to continue participating in the program. Many recipients remain on benefits much longer than needed and continually engage in practices that keep them eligible. These, in turn, beget a cycle that children see their parents engaging in and therefore accept that behavior as the norm. With...
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...Puffery Comparing your product to that of a competitor without scientific studies to substantiate your claims could lead to charges of deception. Saying you make a better pizza is puffery. Saying two out of three people prefer your pizza when you have no studies to substantiate the claim crosses the line to deception. Literal false largely applies to promotional materials that involve statistical and testing proof of claims. The “tests prove” literal false advertising is where advertising relies on a study or test that establishes the supposed validity of the claim. There are also “bald claims” that do not rely on tests or peer-reviewed studies and therefore must be proven to be false Shoplifting is a common crime that occurs when someone steals merchandise offered for sale from a retail store. elements of shoplifting are (1) willfully taking possession of or concealing unpurchasedgoods that are offered for sale (2) with the intention of converting the merchandise to the taker's personal use without paying the purchaseprice kleptomania (a compulsive urge to steal) Some of the things that can happen to shoplifters are: * They may be arrested and paraded through a store in handcuffs. * They may face charges for theft. * They may be banned from stores or malls. * People who have been arrested for shoplifting — especially if it's more than once — may end up with a criminal record. This can make it harder to get a job, get into college, or do the other things...
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...customers, the arrest confirmed the occurrence of the second public fraud in less than two months that victimized the institution. However, the latest one involved a highly rank white-collar who was able to breach the information system of the company. The following paper will present a summary of the case, including the characteristic of the perpetrator, the detective methods that were used, and the effects on the stakeholders. We will also try to classify the fraud based upon the data processing model, assess the types of controls that were in place at the time of the violations, suggest the type of corrective controls that should be adopted, and evaluate the punishment that must serve as deterrent to similar acts. At 35 years old, Gary foster of Englewood Cliffs, New Jersey has been working for Citigroup since 1999. When he left voluntarily in January of 2011, Foster was the vice president of the treasury finance department in charge of funding loans and other business-to-business transactions inside Citigroup. Bank records show that between May 2009 through December 2010, Foster caused approximately over nineteen million of dollars to be wired from Citigroup’s account to his personal bank account at Chase. With a degree in finance from Rutger University and a yearly salary of about one-hundred-thousand dollars, Foster is the ideal example of the white-collar criminal that Romney defines in those terms: “Fraud perpetrators look just like you and me.”...
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...Behavior Anita Pleasant ACC/291 March 10, 2014 J. Leanne Janis Is the Sarbanes-Oxley Act Working? Today’s corporate executives are well aware of the consequences and punishments they face since the enactment of the Sarbanes-Oxley (SOX) Act in 2002, but is the law enough of a deterrent for senior management? Over the past decades many CEO’s have risen to their positions with little training in accounting or finance, and it makes one wonder about the type of decision-making process these non-accountants employ when making financial reporting decisions. The SOX Act was implemented to protect the financial markets in the United States by encouraging corporate officers to become more involved in financial reporting decisions, and holding them more responsible for the data within each financial statements their company issues (Maroney & McDevitt, 2008). Can these in individuals without the necessary accounting training understand and make the accurate financial statement adjustment decisions required by the SOX Act? The Tyco International scandal is a prime example of how a chief executive officer (CEO) who obtained his position by rising up through the company used unethical behaviors which almost destroyed the organization. Even though the scandal occurred before the SOX Act was enacted, it demonstrates how unethical behaviors can affect a business. Dennis Kozlowski started working for Tyco in 1975 as an assistant controller; he joined the board in 1987, and became president...
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...fault finding mission but a determination of whether there was a company, policy, procedure or guideline in place to address this situation, whether the guidelines were followed as designed or adequate to address (or prevent) the specific situation that occurred. If the fraud event occurred because an employee(s) simply failed to follow the internal control policies, then there are corrective measures that business units may take to ensure policies are followed in the future. These include communication to employees regarding increased awareness, correct handling processes and policy adherence. It may simply be that employees performed as expected under the circumstances but there were insufficient internal control policies in place to guide their behavior. Lessons learned here will strengthen internal controls through the creation of new ones. Also learn about the basics of internal investigations A fraud event without in-depth incident evaluation, lessons learned and corrective action generally means that there is an excellent chance the criminals will reload the activity and the company will continue to experience high levels of fraud. A great example of this involves timekeeping amongst non exempt employees. Many companies are now using electronic payroll...
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...Controls for Outflows Accounting 544 / Internal Control Systems Department of Accounting February 16, 2015 Organizations are always fighting to prevent fraud from happening in their day-to-day operations. Fraud can occur almost anywhere within an organization, but it is common in areas of the expenditure cycle because of inadequate recording of transactions or the uncertainty of when to record transactions. When actions such as these occur, the organizations financial statements are understated which causes concerns for financial statement users. For these reasons, organizations need to implement strong internal controls to prevent errors or fraudulent activities from occurring within their daily operations. Team B will discuss several proposals for implementing appropriate controls to cover purchasing, accounts payable, cash disbursements, finance, investment, and payroll. Purchasing According to Louwers, Ramsay, Sinason, and Strawser (2007), purchasing is the gaining of goods or services for the expenditure of cash. It affects more accounts in the general ledger than any other action. It affects inventory, cash, and accounts payable just to name a few (Chapter 8, Acquisition and Expenditure Cycle). Typical source documents for purchasing include invoices from suppliers and vendors, purchase orders, receiving reports made when orders arrive, purchase journal, and fixed asset report. There may be occasions when some items in inventory is unaccounted for due to missing...
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...on the quality of the financial well-being of the Company. We will analyze the Accounts Receivable, Inventory, and Fixed assets of the company and the following describes the way we will attack this assignment. In the accounts receivable, the sales and billing procedures is a section that should call for its immediate consideration. Accounts receivable fraud usually starts with inaccuracies inside the billing procedure and can be looked at by taking a sample of client accounts receivable records and looking over the original transactions data towards the consumer balances. This procedure will reveal fake clients and receivables intended to make the business financial report stronger. The sales and billing procedure has to be accurate in order for the accounts receivable to be right (Wells, 2011). Another problem when the billing is being rectified is the stealing of the payments obtained on a client’s account. The theft usually happens between numerous client accounts where the first payment is taken and the following client’s payment is put towards to the first and the phase continues. To keep this fraud movement working, it’s going to take decent record keeping; but this could be uncovered rapidly if suitable client records are retained and assessed on a consistent basis can be shown fast. Discounting can be an additional part for fraudulent activity inside the accounts receivable practice. This can happen when a worker...
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...Non-For-Profit Fraud Authors’ Note This paper was prepared for Advanced Accounting, Summer 2013. OUTLINE 1. Introduction 2. The Reasons of Fraud in Nonprofits. 3. Types of Nonprofit Fraud. 4. Recent Fraud Cases: A. $1,000,000 Charity Scam by John Cody. B. ASPCA International and $27,000,000 Fraud. C. Fraud Committed by Anita Collins, Church Bookkeeper. D. Fraud Committed by Hugh Blackburn. 5. Fraud Prevention in Nonprofit Organizations. 6. Conclusion. Introduction. Most of us are familiar with the organization ASPCA (American Society for Prevention of Cruelty to Animals) and some of us even donate or consider donating money or time. But not many of us know that only 5 cents of every dollar collected by ASPCA goes actually towards the organization’s primary goal, which is helping animals. Just a few months ago a disaster hit NYC and the areas around. It is hard to believe but it gave great opportunity for fraud. Consider the case of the couple John Sandberg and Christina Terrassino, who launched a charity website, The Hurricane Sandy Relief Foundation. According to DCA (Division of Consumer Affairs), they have solicited more than $600,000 from about 2,000 donors. However, less than 1 percent of the money was given to the victims of the hurricane (Rose, 2013). Beside, consider the case of Anita Collins, a 67-year old church bookkeeper. She is known for stealing approximately $1,000,000 from the church she worked in (Huffington...
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...Health Insurance Fraud By: WAHEED ALKHAMEES KHALED ALNAFEE Further Issues Hospital Administration PA 551 Master of Health and Hospital Administration (Parallel) King Saud University One:- Introduction Definition Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. Types of Insurance Services Insurance can take a number of different forms. Some of these types: Auto insurance Auto insurance protects the policyholder against financial loss in the event of an incident involving a vehicle they own, such as...
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...report illegal activity. To encourage whistleblowers, the whistle-blower law, adopted in 1986, pays informants as much as 30 percent of legal fines reaped during lawsuits. With settlements often exceeding $100 million, whistle-blowers can sometimes see huge payoffs. Some experts are concerned that these payoffs are creating a culture where employees quickly report wrongdoings instead of trying to rectify the situation internally. Douglas Durand, for example, was a former vice president of sales at TAP Pharmaceutical Products. In 1995, he began to suspect that TAP was conspiring with doctors to defraud Medicare. Pharmaceutical companies routinely provide doctors with free samples of the latest drugs; however, Durand believed that TAP was working with doctors to bill Medicare for the free drugs, a practice that is against federal law. Later that same year, Durand became more worried when he discovered that TAP had decided to pay a 2 percent fee to individual doctors to cover “administrative costs”—a kickback in Durand’s opinion. Durand then began preparing to blow the whistle on TAP and its affiliates. “I wanted to do the right thing,” he says. After being referred to attorney Elizabeth Ainslie by one of his colleagues, Durand started keeping notes and collecting company documents, while his lawyer attempted to get the federal government involved. In February 1996, Durand received a $35,000 bonus from TAP and then quit...
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...Chapter 04 The Corporate Culture -Impact and Implications True / False Questions 1.Due to diverse employee groups and management styles, the work culture of a large global firm in one country will differ significantly from the work culture of the same firm halfway around the world. FALSE Despite the fact that corporations have many locations, with diverse employee groups and management styles, an individual working for a large global firm in one country will share various aspects of her or his working culture with someone working for the same firm halfway around the world. 2. Corporate culture shapes, and is shaped, by the people who are members of the organization. TRUE While culture shapes the people who are members of the organization, it is also shaped by the people who comprise it. 3. Differing individual perception of culture makes it easier to define the specific culture within an organization. FALSE Defining the specific culture within an organization is not an easy task since it is partially based on each participant's perception of the culture. 4. In situations where an organization lacks strong leadership for ethical decision making despite the clarity of law, the business culture is likely to be the determining factor in the decision. FALSE In situations where the law provides an incomplete answer for ethical decision making, the business culture is likely to be the determining factor in the decision. 5. Organizations with similar missions...
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...INTERNAL CONTROLS AND FRAUD PREVENTION IN NON-PROFIT ORGANIZATION WRITTEN BY DAVID SANNI Designed to provide information on key areas that can strengthen the internal control system of VI-MID-ISLAND SERVICE (VIMS) Submitted To VANESSA OLTMAN Faculty of Management Vancouver Island University Nanaimo, BC, Canada (Nov/15/2012) Table of Content 1.0 INTRODUCTION 3 2.0 NATURE OF FRAUD IN CANADIAN NON PROFIT ORGANIZATION 3 2.1 TYPE OF FRAUD IN NON PROFIT ORGANIZATIONS 3 2.2 PERPETRATORS OF FRAUD IN NON PROFIT ORGANIZATION 4 2.3 IMPACT OF FRAUD TO NON PROFIT ORGANIZATION 4 3.0 COMPREHENSIVE APROACHE TO REDUCE FRAUD 5 3.1 UNDERSTANDING INTERNAL CONTROL 5 3.2 BENEFIT OF INTERNAL CONTROL 5 3.3 LIMITATIONS OF INTERNAL CONTROL 6 3.4 CONTROL MEARSURES IN PREVENTING FRAUD 6 3.5 SUMMARY AND CONCLUSION……………………….………………….8 4.0 REFERENCE…… ……………………………………………………………9 1.0 INTRODUCTION The Canadian non profit sector has one of the largest populations in the world, accounting for over 7% GDP and creating 2 million full time jobs for Canadians. Further discoveries was made that 78% Canadians donates money to non profit Organization irrespective of all walks of life and income bracket. These donations are received to address core issues...
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