...I O N A L F R A U D A N D A B U S E 2012 GLOBAL FRAUD STUDY Letter from the President & CEO More than 15 years ago, the ACFE’s founder and Chairman, Dr. Joseph T. Wells, CFE, CPA, conceptualized a groundbreaking research project to study the costs, methodologies and perpetrators of fraud within organizations. The result was the 1996 publication of the ACFE’s first Report to the Nation on Occupational Fraud and Abuse. Since then, we have released six additional Reports that have each expanded our knowledge and understanding of the tremendous financial impact occupational fraud and abuse has on businesses and organizations. We are proud to say that the information contained in the original Report and its successors has become the most authoritative and widely quoted body of research on occupational fraud. The data presented in our 2012 Report is based on 1,388 cases of occupational fraud that were reported by the Certified Fraud Examiners (CFEs) who investigated them. These offenses occurred in nearly 100 countries on six continents, offering readers a view into the global nature of occupational fraud. As in previous years, what is perhaps most striking about the data we gathered is how consistent the patterns of fraud are around the globe and over time. We believe this consistency reaffirms the value of our research efforts and the reliability of our findings as truly representative of the characteristics of occupational fraudsters and their schemes. On behalf of the ACFE...
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...The case study states that the perpetrator had the ability to override internal controls by breaking into other employees computers and create fraudulent invoices and fictitious payables to forge checks payable to her own name. According to the 2010 Report to the Nations on Occupational Fraud and Abuse the perpetrator committed fraud by an asset misappropriation scheme in which the perpetrator steals or misuses an organization’s resources. Asset misappropriation is broken down into some sub-schemes like skimming, cash larceny, billing, expense reimbursement, check tampering. She was a well-trusted employee and even had previously caught other employees involved in embezzlement and frauds. So there was no reason to expect her of committing a fraud, costing the Company $204,000.00. In the Reports to the Nations study, the average organization annually loses were 5 % of its revenues due to fraud. This is an important topic and individuals have been committing these acts for as long as records have been kept. It is important to implement fraud programs to help reduce or eliminate fraud loses. One of the major things the Company could do to help prevent any future fraudulent activities is start educating the employees on preventing and detecting fraud. Employees should be trained in what constitutes fraud, how it hurts everyone in the company and how to report any questionable activities. According to the Report to the Nations on Occupational Fraud and Abuse organizations...
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...Data Mining for Fraud Detection: Toward an Improvement on Internal Control Systems? Mieke Jans, Nadine Lybaert, Koen Vanhoof Abstract Fraud is a million dollar business and it’s increasing every year. The numbers are shocking, all the more because over one third of all frauds are detected by ’chance’ means. The second best detection method is internal control. As a result, it would be advisable to search for improvement of internal control systems. Taking into consideration the promising success stories of companies selling data mining software, along with the positive results of research in this area, we evaluate the use of data mining techniques for the purpose of fraud detection. Are we talking about real success stories, or salesmanship? For answering this, first a theoretical background is given about fraud, internal control, data mining and supervised versus unsupervised learning. Starting from this background, it is interesting to investigate the use of data mining techniques for detection of asset misappropriation, starting from unsupervised data. In this study, procurement fraud stands as an example of asset misappropriation. Data are provided by an international service-sector company. After mapping out the purchasing process, ’hot spots’ are identified, resulting in a series of known frauds and unknown frauds as object of the study. 1 Introduction Fraud is a million dollar business and it is increasing every year. ”45% of companies worldwide have fallen victim...
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...S E C T I O N II Understanding White-Collar Crime Definitions, Extent, and Consequences S ecti on Hi g h l i g h ts •• •• •• •• •• •• White-Collar Crime: An Evolving Concept Modern Conceptualizations of White-Collar Crime Extent of White-Collar Crime Consequences of White-Collar Crime Public Attitudes About White-Collar Crime Characteristics of White-Collar Offenders A 34 s noted in the introduction, Edwin Sutherland created the concept of white-collar crime more than 70 years ago to draw attention to the fact that crimes are committed by individuals in all social classes. As will be seen in this section, one of the largest difficulties in understanding white-collar crime has centered on an ongoing debate about how to define white-collar crime. After discussing various ways that white-collar crime can be defined, attention will be given to the extent of white-collar crime, the consequences of this illicit behavior, public attitudes about white-collar crime, and patterns describing the characteristics of white-collar offenders. Section II Understanding White-Collar Crime 35 As a backdrop to this discussion, consider the following recent white-collar crimes described in the media: •• A jury convicted [then-Baltimore mayor Sheila] Dixon . . . of embezzling about $500 worth of gift cards donated to the city for needy families. Dixon then pleaded guilty last month to lying about thousands of dollars in gifts from her former boyfriend, a prominent developer...
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...written permission of the publisher or a licence from the Copyright Licensing Agency Limited. Details of such licences (for reprographic reproduction) may be obtained from the Copyright Licensing Agency Ltd of 90 Tottenham Court Road, London, W1P 0LP. A catalogue record of this book is available from the British Library ISBN 0 335 20427 9 (pb) 0 335 20428 7 (hb) Library of Congress Cataloging-in-Publication Data Croall, Hazel, 1947– Understanding white collar crime / Hazel Croall. p. cm. — (Crime and justice) Includes bibliographical references and index. ISBN 0–335–20428–7 — ISBN 0–335–20427–9 (pbk.) 1. White collar crimes. I. Title. II. Crime and justice (Buckingham, England) HV6768 .C755 2001 364.16´8 — dc21 00–050174 Typeset by Type Study, Scarborough Printed in Great Britain by Biddles Limited, Guildford and Kings Lynn chapter one Contents Series editor’s foreword Acknowledgements 1 Conceptualizing white collar crime White collar crime and criminology What is white collar crime? Are white collar crimes distinct from other crimes? Varieties of white collar crime Is white collar crime, crime? Researching white collar crime Concluding comments Further reading Exposing white collar crime ‘Counting’ the uncountable:...
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...Week Assignments And Case Study IF You Want To Purchase A+ Work then Click The Link Below For Instant Down Load http://www.hwspeed.com/Grand-Canyon-ACC-664-Entire-Course-3323122222202.htm?categoryId=-1 IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM Questionweek 1 Describe some of the tools and references available on the ACFE Web site and explain how they can be used by a forensic accountant. Provide at least two specific examples to support your explanation The article, "Help for Solving CPAs' Ethical Dilemmas" discusses ethical issues in today's environment. Discuss how these tools could assist a forensic accountant in evaluating an ethical issue. week 2 Select another state and compare and contrast that state's definition of fraud with Arizona's definition. Is either definition more appropriate than the other? Why? Based on the information provided in the Association of Certified Fraud Examiners 2010 Report to the Nation on Occupational Fraud and Abuse, select one of the major categories of occupational fraud and discuss in detail how perpetrators are able to commit these types of frauds. week 3''' Select an example of an asset misappropriation case and discuss how a perpetrator would commit this type of fraud and what types of internal controls management could implement to help to prevent or detect this type of fraud. 2 Select an example of a corruption case and discuss how a perpetrator...
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...Social class and crime Most studies in sociology suggest that the most serious and frequent offenders are young working class males. However, there may be a bias in the statistics that results in the idea that ‘white collar crime’ is underestimated... * WHITE COLLAR CRIME - middle class members of the business world - invisible and complex. * BLUE COLLAR CRIME - working class members in society - often visible and more likely to be punished. Sutherland (1949) first used the term ‘white collar crime’. He challenged the assumption that crime is mostly a working class phenomenon. However, his own definition is not helpful. The problem with it is that he does not distinguish crimes committed for an organisation. Writers have therefore distinguished between crimes: * CORPORATE CRIME - carried out on behalf of the organisation (e.g. tax evasion). * OCCUPATIONAL CRIME - benefits the individual at the expense of the organisation (e.g. embezzling money). White collar crimes are more technical, complex and discrete and often receive more lenient punishments than blue collar crimes. For white collar crimes, there is a fine line between what is acceptable and what is not. It is often about what is morally wrong rather than legally wrong. Occupational/Corporate crime: The study of these crimes developed from the work of Sutherland in the 1940s. He used the term white collar crime to refer to crime committed by people who worked in offices. His work overlaps with the interests...
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...topologies within this subset of White Collar Crime yielded very few results. The author examines this from two broad categories. accounting for several factors within criminology or social science to allow a better study of the topic, in a more narrow scope. From these typologies, we can also draw numerous scientific values. The author uses the type of activity to study an area. The other typologies include, victims, such as the general public, consumers and employees. Another typology is the size of entity, such as the crime of a major domestic corporation. Thirdly, the product or service involved is another topology. Finally, the nature of the harmful activity. I believe the victim and type of activity are the most significant, because you will most likely have the most data to draw from. Victims will almost definitely report their loss if they suspect foul play; all the while the type of activity will be reported or derived from the victims report. These areas, in my mind, hold for quantitative data. 2. Identify and discuss how the corporate abuse of power, corporate fraud, and corporate economic exploitation are interrelated, and which segments of society suffer from these forms of White Collar Crime. The corporate abuse of power, corporate fraud and corporate economic exploitation are interrelated by very undefined line. Based on my reading corporate abuse of power may be...
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...all of the following except: Mental Models Spirituality Greenfielding 2. Question : (TCO F) Manually altering entries in an organization‘s books in order to conceal fraud is called: Shrinkage Forced reconciliation Padding the books Instructor Explanation:Wells, Chapter 9 3. Question : (TCO F) During an interview, when an interviewee repeatedly fiddles with a pen or picks lint from her clothing, he/she is giving non¬verbal clues called: Signals Manipulators Exemplifiers Instructor Explanation:Wells, Chapter 15 4. Question : (TCO F) When the subject of an investigation has been accused of misconduct, establishing a morally acceptable rationalization might allow the accused to reconcile his actions with his conscience. Which of the following is not an example of an acceptable rationalization? The accused felt that he needed to get back at someone in the organization. The accused engaged in the misconduct for the benefit of others. The accused has personal demons that can’t be overcome. Instructor Explanation:Wells, Chapter 15 5. Question : (TCO F) In one of the case studies in the Wells textbook (page 49), Brian Lee, a top¬notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. What was his motivation for committing the fraud? Repay his students loans. Fund his charitable doctor work. None of the above Instructor Explanation:Wells, Chapter 2 6. Question : (TCO F) Nicolette Garrison works...
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...Chapter 8 – Register Disbursement Schemes 1. Register disbursement schemes are different from skimming and larceny at the register in that they: a. Are on-book schemes, where as skimming and larceny are off-book schemes b. Require the use of an accomplice c. Leave a record of the removal of money on the register tape d. All of the above 2. Which of the following is a type of register disbursement scheme? e. Fictitious refunds f. Overstated refunds g. False voids h. All of the above 3. When an employee perpetrates a credit card refund scheme, the perpetual inventory will show a greater amount than the physical inventory. i. True j. False 4. An excessive number of reversing sales transactions at the register is an indicator of which of the following schemes? k. Skimming l. Register disbursement m. Pass-through scheme n. Multiple reimbursements 5. Register disbursement schemes are difficult to conceal because they cause the cash drawer to be out of balance with the cash register tape. o. True p. False 6. Which of the following can be used to conceal a false refund scheme? q. Destroying register tapes r. Issuing refunds below the review limit s. Forcing inventory totals t. All of the above 7. For the perpetrator, the most dangerous part of a typical register disbursement scheme is often: u. Physically...
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...Running head: WHITE COLLAR CRIMES White Collar Crimes: How Does It Affect Businesses? Shari M. Lewis Strayer University (Online) Table of Contents ABSTRACT 3 INTRODUCTION 4 Introduction to the Problem 4 Background of the Study 4 Statement of the Problem 4 Purpose of the Research 5 Research Questions 5 Significance of the Research 5 LITERATURE REVIEW 7 CONCLUSION AND RECOMMENDATIONS 19 ABSTRACT This paper investigates White Collar Crime (“WCC) in society and the affects it has on businesses in today’s society, the cost and statistics involved with white collar crime and the difference in how white collar crime and street crimes are dealt with. While white collar crime has existed for many decades, I have conducted research regarding the definition of white collar crime, the history of white collar crime, the different types of white collar crime that affect businesses directly and indirectly, goals of white collar crime, fraud statistics and the cost factors related to white collar crime. White collar crimes and business ethics play hand in hand with one another and often cross the line with one another into criminal behavior. White collar crimes have played a very instrumental part in our downward economy over the past five years, and the level of trust given by society to corporations and employers entrusted with their life earnings has changed dramatically. My research will include factors that contribute...
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...Worldcom Fraud Investigation Use the Fraud Triangle and Fraud Scale to critically analyse the actions of Bernie Ebbers and Scott Sullivan during the WorldCom saga/ What does your analysis suggest? Dennis Greer’s fraud triangle is a key framework in analysing the ‘factors that cause someone to commit occupational fraud’ (ACFE-The Fraud Triangle, Association of Certified Fraud, Examiners Available from:http://www.acfe.com/fraud-triangle.aspx [January 2014]). The three elements that make up the model are perceived pressure, perceived opportunity and rationalisation. In reference to the events of WorldCom, which has been labelled to date, ‘one of the biggest accounting scandals in history’ (CNN Money- WorldCom’s Financial Bomb, Available from:http://money.cnn.com/2002/06/25/news/worldcom/. [June 2002]) the initial pressures that were the driving force behind the actions of CEO, Bernie Ebbers and CFO Scott Sullivan are quite vast. Firstly Ebbers, was faced with the managerial strain of financial pressure on management due to the decline in the economic environment and the high expectations of Wall Street. As a result, he was aware that the key to growth was in acquisition and mergers, which required an illusion of a solid investment portfolio and therefore ‘a heavy dependence on the performance of WorldCom shares’ (Forbes- Bernie Ebbers Guilty, Available from: http:// www.forbes.com/2005/03/15/cx_da_0315ebbersguilty). In addition, Ebbers was fuelled...
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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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...Sarbanes-Oxley The Sarbanes-Oxley act of 2002 is a law passed to control financial scandals such as Enron and WorldCom, and restore investor confidence. Sarbanes-Oxley, or SOX as many people call it, was considered a significant change to federal securities law, but at the time, the costs were unknown. Today after nine years, companies have realized that the costs of this act are not be stopping the fraud as originally expected, and it is having some unintended consequences to the securities industry. The most important, and possibly the most costly parts of this act are corporate responsibility, increased internal controls, new auditing requirements, privatization of businesses, and the reaction to this act by foreign entities. Title I & II– Public Company Accounting Oversight Board and Auditor Independence The act established the Public Company Accounting Oversight Board (PCAOB), which was placed in charge of developing and enforcing professional standards, ethics, and competence of accounting professionals providing services to publicly traded companies. The PCAOB recently announced its budget for 2011 would be $204.4 million to perform these duties (Financial News, 2010). One of their guidelines is that public accounting firms that provide audit services to public companies can no longer provide any bookkeeping, consulting, actuarial, or investment services that may interfere with their objective findings in an audit, and to guarantee auditor independence the act provides...
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...Systems Audit and Control Association. All rights reserved. www.isaca.org. How to Use a New Computer Audit Fraud Prevention and Detection Tool By Richard B. Lanza, CPA, PMP W hile occupational fraud takes various forms, the result is always the same: the numbers generated by fraud cannot hold up to the unfailing logic of the accounting equation. If executives add false sales and accounts receivable to increase the organization’s revenue, profits and cash will be out of kilter. The advancement of technology has allowed for this “accounting equation” to be systematized into computer logic and applied to company data.1 Results of this logic could take the form of a simple matching of the human resource file to the accounts payable vendor master file. On the other side of the coin, it could be an advanced neural network application focused on detecting money laundering schemes. Whether it is simple or advanced, data analysis provides many benefits in the prevention and detection of fraud. On one hand, the fraud examiner gains insight on 100 percent of an organization’s transaction data vs. more limited manual methods of selection. Further, this approach can generally be completed in less time than manual procedures, given the automation of the work. Examiners also gain improved business intelligence as the generated reports often lead to conclusions beyond whether just fraud occurred. Such new insights can lead to suggested process improvements to the client. The Institute of Internal...
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