...Assignment 1: Review of Business Fraud Tara Johnson Professor: Jim Ridilla, CPA ACC 564— Accounting Information Systems May 1, 2012 Assignment 1: Review of Business Fraud Compose a summary of the case. Include how the fraud was perpetrated, the characteristics of the perpetrator(s) who committed the fraud, the role the auditors had in the case, and the direct and indirect effects the incident had on the organization’s stakeholders (customers, vendors, employees, executive committee, and board of directors). In 2011 Bank of America suffered a data breach from within the company that cost Bank of America approximately $10 million. A former Bank of America employee provided confidential information to a criminal fraud ring. That data was then used to steal funds from 300 customers in California and other states in the western United States. The names, addresses, Social Security numbers, phone numbers, bank account numbers, driver’s license numbers, birth dates, email addresses, mother’s maiden names, PINs and account balances were among the information that was released. That information was ultimately used to open new accounts, order checks, and make other bank transactions without the customer’s knowledge. This incident decreased the amount of trust the customers had in the company. The fraudsters were engaging in this activity for nearly a year and it should have been detected sooner. This fraudulent activity directly and indirectly affected it stakeholders...
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...ASSIGNMENT 1: REVIEW OF BUSINESS FRAUD ABSTRACT Business fraud is a white-collar crime that is increasing at a rapid pace. One case of business fraud dealt with an information breach within Bank of America’s information system. This breach affected over 300 Bank of America customers. Management failed to provide proper security for their information system and the sensitive information of their customers. The following assignment will give detailed specifics about the case, clarify the classification of this particular fraud, and suggest recommendations that can help prevent this fraud from reoccurring. ASSIGNMENT 1: Review of Business Fraud On May 24, 2011, an investigation was in process within the Bank of America organization for potential business fraud. A Bank of America employee had manage to copy the personal information of over 300 of the bank’s customers. The security breach allowed the Bank of America employee to communicate the sensitive information of the customers to a ring of scammers. Customer information compromised included the customers’ names, physical addresses, Social Security numbers, contact numbers, checking account numbers, savings account numbers, routing numbers, driver's license numbers, date of births, email addresses, mother's maiden names, PINs and the balances on their accounts. Scammers used this information to start up credit cards and to spend the money available on the customers’ bank accounts. The leaking of the confidential...
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...Consideration of Fraud within Small Business Organizations Introduction In recent studies made by Klynveld, Peat, Marwick and Goerdeler, LLC (KPMG), Fraud and Misconduct survey 2010 shows “The value of frauds committed by employees has double during the past two years with the average case now costing victims $3 million. The survey found that 61% of cases, there was no recovery of cash stolen, and that the average time to detect major fraud has increased from 342 days to 399 days. It also confirms the traditional profile of the average fraudster: a 38-year old male, who has been with a business for several years and holds a management position”. This paper analyzes and examines the three elements of the fraud triangle, including it’s characteristics, symptoms, and fraud prevention programs according to the case scenario. The fraud triangle theory was first accredited to Donald R. Cressey, integrating the three elements that must be present for occupational fraud. *Perceived Pressure *Perceived Opportunity *Rationalization According to the Association of Certified Fraud Examiners (ACFE), “Fraud encompasses a range of irregularities and illegal acts characterized by intentional deception or misrepresentation, which an individual knows to be false or does nor believe to be true. Further, fraud is perpetrated by a person knowing that it could result in some unauthorized benefit to him or her, to the organization, or to another person, and can be...
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...accounting fraud in small business and narrowing the topic to two main factors that allow the fraud to take place. The presentation will be specifically informational in nature. Once I have finished my presentation, the audience will have a clear understanding of my central idea, which is why limited staff and family trust are reasons that small businesses are victims of accounting fraud. The ideal audience for my presentation would be a meeting of a small business alliance, chamber of commerce, entrepreneur club, and any other group or class that would benefit from learning about accounting fraud in small businesses. My topic would benefit a more specific group of people such as those that are interested in or work in the field of accounting or business. Since my intended audience are adults that are working in the field of accounting or business or have an interest in these fields; my topic is appropriate for the age range, interests and general knowledge of my audience. The importance of my presentation to the audience is significant since the individuals in the intended audience will be either working or interested in business or accounting and quite possibly be involved in a small business at some level. It will be important for them to know about the reasons small businesses are the most common victims of accounting fraud. Once informed about the reasons, they will be able to apply what they have learned from my presentation towards identifying possible fraud in the small...
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...Business Fraud Strayer University ACC564 James Ridilla Jr. January 25, 2012 Business Fraud Stanford Financial Group was a privately held international group of financial services controlled by Allen Stanford. Stanford financial Group was comprised of several affiliated companies: Stanford Capital Management, Stanford Group Company, Stanford International Bank, Stanford Trust Company, Bank of Antigua and the Stanford Coins and Bullions. Stanford Group Company was a diversified financial services company. The organization offered brokerage and investment advisory, private and commercial banking, investment advisory, trusts, real estate investment services, and investment banking services. It also had private equity investments through the Stanford Venture Capital Holding, Inc. The company’s headquarters was in Houston, Texas with additional offices in Baton Rouge, Louisiana; Irving, Texas; Memphis, Tennessee; Miami, Florida; and Denver, Colorado. This large international financial group controlled by Allen Stanford came crashing down in 2009 when it was discovered that these companies had claimed higher rates of returns on their CDS than those offered by commercial banks in the U.S. and consistent double-digit returns on his bank investment portfolios were nothing more than a Ponzi scheme. In this Ponzi scheme Stanford perpetrated a scheme to defraud investors who purchased his Stanford International Bank (certificates of deposit) of billions of dollars by soliciting...
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...household banks such as JP Morgan Chase, U.S. Bancorp, Citigroup, Capital One, and Barclays Bank to name a few. Roughly 50 companies were affected by this major breach one that the Guardian called “the largest Internet security breaches in U.S. history” . Experts say the good news is this was not credit card data, Social Security numbers, or account numbers and passwords. The hackers mainly got email addresses and names. Even though these scammers did not receive credit card information or social security numbers it is still a major breach that can cause serious damage to its clients. This is a concern because of a crafty way to obtain personal information from someone through a technique called phishing. “Phishing is a type of Internet fraud that seeks to acquire a user’s credentials by deception. It includes theft of passwords, credit card numbers, bank account details, and other confidential information. Phishing messages usually take the form of fake notifications from banks, providers, e-pay systems...
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...6.2.1 Fraud can occur for many reasons; some of the causes are as follows. 6.2.2 Poor accounting controls where accounting controls are lapse for example a bank reconciliation signals that a fraud has occurred can be missed. 6.2.3 Complacency, thinking fraud wouldn’t occur in a business, people will take advantage of this attitude. 6.2.4 Excessively complex organisational structure, designed to hide reality from third parties, Enron is a prime example of this. 6.2.5 Lack of clear moral direction from senior management, leadership stems from the top, others will adopt their behaviour. 6.2.6 No independent internal audit department, fraud and its signs are more likely to be hidden. 6.2.7 Excessively generous performance bonuses, the more temptation...
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...Assignment 2: Review of Business Fraud ACC 565 – Accounting Information Systems July 28, 2012 Summary of United States vs. Bo Zhang Bo Zhang, a Chinese computer program, was a contract employee assigned to the Federal Reserve Bank of New York (FRBNY), between May 2011 and August 11, 2011, to work on further developing a specific portion of the Government Wide Accounting program (GWA) source code (FBI, 2012). Mr. Zhang was not a United States citizen and was here on a VISA. The United States had spent approximately $9.5 million to develop the GWA code. The FRBNY was given the task of moving the Government Wide Accounting program, developed to help track the billions of dollars the United States government transfers daily, from an antiquated IBM mainframe computer to the Internet, according to a person familiar with the project (Chicago Tribune, 2012). In the summer of 2011, Zhang stole the GWA Code and, without authorization from FRBNY, copied it onto his hard drive at the FRBNY and an FRBNY-owned external hard drive. He then transferred the code to his private office computer, his home computer, and his personal laptop (FBI, 2012). Zhang used the GWA code to access the government system and submit fraudulent documentation to immigration authorities to help foreign nationals obtain visas to enter and work in the United States. Zhang falsely represented to immigration authorities that certain foreign nationals worked full-time for his...
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...Fraud and Internal Controls: Business Fraud Case Advanced Accounting Information Systems It’s amazing that in this day and age when technology is supposed to be the most efficient way to run this economy and all its businesses it can still have a major blunder, such as, data breaches that can cause many companies millions and millions of dollars. There are so many data breaches that have occurred lately, one right after the other, such as Sony’s PlayStation, Nintendo, Citigroup, T.J Maxx and even numerous healthcare companies like WellPoint and AmeriHealth. “The problem is that while a company’s data-collecting ability has increased dramatically, network security safeguards, although certainly progressing, have lagged behind, as evidenced by the increased frequency of large-scale breaches. We’ve seen high-profile breaches like Sony and CitiGroup; numerous healthcare companies like WellPoint and AmeriHealth; government agencies such as the VA; universities like UCLA, which lost donor information; and retailers such as TJ Maxx who paid out nearly $41 million a few years ago to banks and VISA because of a massive breach of customers’ credit card data. As information is made digital it becomes very portable and thus easier to lose or steal”. (www.programbusiness.com/News/Interview-The-Digital-Age-of-Data-Breaches-Risk-Management-and-Cyber-Insurance,) In today world everything has to be “digitized” compared to priors years and many corporations or companies are wholeheartedly...
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...information given a contract is necessary because according to the Statute of Fraud it states that sale of goods priced at five hundred dollars or more. This type of contract needs to be a writing or memorandum and signed. The essential terms of this writing are quantity, signed by party to be charged, name of parties, subject matter, and consideration. In this scenario there was a contract offer because Garvey had written offers for the Porpoise to Caldwell but we are not sure if Garvey met all the requirements of the Statute of Fraud law and then five days later he informed Caldwell that he is going to sell Porpoise to Montgomery someone totally different. Also it does not mention anywhere that Caldwell signed any contract and sent back to Garvey to prove his acceptance, so that is why I say there is no contract in this situation. b) According to the facts given a contract is necessary in this situation because according to the Statute of Fraud any goods priced at five hundred dollars or more needs to be a writing or memorandum and signed. This writing needs to include the quantity, signed by party being charged, name of parties, subject matter, and consideration. This applies to this situation because Priscilla is for $4200 which is way more than five hundred dollars. Garvey did offer a contract because he mailed a written offer but we are not sure if he completed all the requirements from the Statute of Fraud. However this is a tough situation because Meens mailed a rejection...
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...First Universal Lending LLC- An Elaborate Scam By Javoris L. Brown Strayer University LEG100 – Emily Smith Business Law 1 November 2012 The local business I choose to do my research on is First Universal Lending LLC, a limited liability company created by attorney David J. Feingold. Originally, First Universal Lending was created to help borrowers with the process of financing or purchasing a home. However, throughout the time that they were helping borrowers, many people were put into loan payments that they could not afford. With their livelihood and pride at state, borrowers began to complain about the loan that First Universal Lending acquired for them. Once these complaints were made public the company’s credibility reached an all-time low. In an effort to rekindle the flame the company hired new managers and personnel to point them in the right direction. Sean Zausner and his younger brother David Zausner were the new recruits that would maximize the profit and minimize the lost. After doing a bit of research, the Zausners proposed a new program that was capable of having an infinite line of income, The Loan Modification. During the loan modification process borrowers were attempting or led to believe that the terms of their mortgage could be reconstructed to their benefit or needs. With their home and family at state borrowers were willing to pay anything to keep their houses, this train of thought is what the Zausners predicted to happen. Once David Feingold...
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...Systems and Information Breach A Review of Business Fraud Abstract This paper explores the Sony Corp hacking case committed in April 2011, with the use of five published articles that support a review of business fraud against the company. The paper will include the following requirements: 1. A summary of a case study and include how the fraud was perpetrates, the characteristics of the perpetrators who committed the fraud, the role the auditors had in the case, and the direct and indirect effects the incident had on the organization’s stakeholders (customers, vendors, employees, executive committee, and board of directors) 2. Suggestions and rationalizations concerning the fraud classifications and that the case can be categorized into (based on the data processing model) will be presented 3. Suggestions regarding the types of controls that may have been in place at the time of the violation 4. Recommendations of two (2) types of controls that could be implemented to prevent fraud in the future and additional steps management can take to mitigate losses. 5. Judgment concerning the punishment of the crime (was it appropriate, too lenient, or too harsh) and whether the punishment would serve as a deterrent to similar acts in the future. The assignment will take the Sony Corp. systems fraud case and attempt to evaluate the different approaches and techniques that are used to commit, detect, and prevent computer fraud. Control and security concepts related to...
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...Reference 16 a) As the auditor, describe the concerns you have that may suggest fraud is occurring in the company. The Fraud Triangle ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley The fraud triangle originated from Donald Cressey's hypothesis (Donald R. Cressey, 1973). The fraud triangle is a model for explaining the factors that cause someone to commit occupational fraud (acfe, n.d.). Type of fraud: Management fraud Fraudulent financial reporting Misappropriation of assets. (Arens/Elder/Beasley, 2012) ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley At the types of fraud, usually the Management fraud are including fraudulent financial reporting and the misappropriation of assets. Why the company will occurs the fraud, because the employees and managers have incentive, opportunities and attitude. The fraud specific fraud risk area are including revenue and accounts receivable fraud risk, inventory, purchases and other area Management fraud Management fraud, as the name suggests, is perpetrated by the top management of a company who has the intention of misleading investors (Dutta, 2013). Usually management fraud by accounting manipulation and misstates the...
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...Anatomy of computer accounting frauds A. Seetharaman, M. Senthilvelmurugan and Rajan Periyanayagam Faculty of Management, Multimedia University, Malaysia Keywords Fraud, Corruption, Financial reporting, Whistleblowing, Internal control, Corporate governance Abstract This paper introduces fraud as asset misappropriations (85 per cent of cases), corruption and fraudulent statements. Symptoms include accounting anomalies, lack of internal control environment, lifestyle and behaviour. The most effective tools for fraud detection are internal audit review, specific investigation by management, and whistle-blowing. The paper details the fraud investigation process and the role of auditors as fraud examiners. The correlation of fraud perpetrators’ personality with the size of losses is examined. Personality is analysed into age, gender, position, educational background and collusion. A strong system of internal control is most effective in fraud prevention. Fraud prevention procedures, targeted goals and improvements to system weaknesses feature in the paper. Fraud impacts on accounting transactions in accounts receivable, receipts and disbursements, accounts payable, inventories and fixed assets, and financial reporting. The monetary impact resulting from fraud is analysed by the type of victim and the amount of loss. Internal control and good employment practices prevent fraud and mitigate loss. Computer accounting frauds 1055 Introduction Accounting fraud involves an intentional action...
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...The Threat of Fraud Tracey Brewer American InterContinental University Security and Loss Prevention CRJS270-1301B-01 Jade Pumphrey March 28, 2013 Abstract Identity theft, whether on a personal or business level is a criminal act. So, for many years individuals have plotted and schemed to come up with scams to obtain personal information from other individuals or organization to either sabotage one’s reputation or obtain financial gain. Either way, this wave of criminal activity is wreaking havoc to innocent people and successful organizations everywhere. The Threat of Fraud Introduction Corporate fraud and executive identity theft are crimes that are on the rise. I don’t think corporations understand the impact this crime can have on their business. It only takes a few measures to ensure that the company is protecting against someone being able to access information that could bring the entire corporation to the ground. It can takes years to establish credit, build clientele and provide a service to the country or a community, however, it can only take the click of a mouse, that one email attachment or that one dishonest employee and your entire businesses financial data has been obtained, used or sold for the sole purpose of financial gain. Therefore, to protection your organization’s personal information. Well, it’s time to get the facts, take the necessary precautions, and start the process for what could be the first steps in protecting your organization...
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