...March 6, 2016 Fraud Detection According to a study conducted by the Association of Certified Fraud Examiners (ACFE), fraudulent financial statement accounts for approximately 10% of incidents concerning white collar crime (2009). In order to prevent this number from increasing, fraud examiners, employees, and management need to detect fraud early and prevent it. Financial Statement Fraud Falsifying financial statements involves the manipulation of financial accounts by overstating assets, sales and profit, or understating liabilities, expenses or losses. By using either trend analysis and/or financial statement analysis, one can detect fraud and anomalies. The statement of cash flows shows the cash inflows and cash outflows during a period. The statement details the net increase or decrease in cash as a result of operations, investment activities, and financing activities. Possible Fraud A company will want to build inventory to anticipate future sales, and in doing so, tries to meet the increase in sales with that of inventory growth. A possible reason for inventory that is growing at a faster pace than sales might indicate obsolete, slow-moving merchandise or overstated inventory. I believe in this case, most likely, fraud is occurring due to the significant difference between the two rates. With inventory increasing at a rate of 39 percent per year and sales only increasing at a rate of 4 percent per year, possible red flags may be found when analyzing the financial statements...
Words: 956 - Pages: 4
...activity based upon a Childs social behavior and skills and understand how to help them? Have you ever wondered if we could prevent someone from becoming a criminal? Many people have studied the social behaviors in children to predict the chances of them becoming criminals in their future. This idea is becoming more popular as well as recognized in the United States in hopes that we can help the children with high chances before it is too late. The three main predictors looked at are anti-social children, their aggressiveness, as well as their reactions towards affection. Though there are many other social predicts these three are the biggest ‘red flags’ used by those who conduct the studies. Being anti-social at a young age forces a child to being independent and lack in social skills needed to interact in society. Though many cases are just shy children whom find it difficult to initiate conversation; others are drastically different. The shy children are taken out of the equation for high chances of criminal ability do to the fact of one word, choice. A child whom chooses not to interact with other children typically does so because they see themselves as higher than the other children. This leaves the other children to believe this child is weird or an outcast. Therefore the child is treated differently at school, or other places in which they would interact. This can grow to hatred from being tormented by the children and lead the child into a life of hatred and loneliness...
Words: 834 - Pages: 4
...Case Study Forum 2 Ethics Scenario 1 Anne is a 16-year old girl who has been seeing a counselor weekly for two month. Her parents set up the sessions after noticing Anne’s eating disorder. Anne admitted to the counselor that she was anorexia. The counselor later learns that Anne is struggling in school, having anger outburst and hearing voices that tell her to harm herself. The first red flags would be that the counselor was uncomfortable from the beginning because she had not counseled anyone who had struggled with anorexia, and the counselor had minimal education in this area. The second red flag is that the counselor had already being seeing the counselee for two months and still had not referred the counselee to another counselor who had more credentials to handle all of Anne’s issues, which is unethical according to the AACC code of ethics. When the counselor learned that the counselee was hearing voices telling her to harm herself this was another red flag that was not taken serious enough to refer the clients to someone more experienced in this area. The AACC code of ethics competence, consultation and referral 1-210 states “we do not offer services or work beyond the limits of our competence” (Clinton, & Ohlshlager. 2002). AACC code of ethic 1-220 states that a counselor who does not have the proper credentials to counsel that client they should refer a client to a more competent colleague who would have the education credentials and experience...
Words: 402 - Pages: 2
...1. INTRODUCTION Low back pain (LBP) is primarily managed in general practice and commonly underestimated or misdiagnosed by physicians. This chapter aims to present a simple approach for diagnosis and evaluation of LBP according to current clinical guidelines. The contents will discuss in details the definition and prevalence of LBP and important steps of diagnosis starting from history-taking, physical examination, radiological studies, and finally how to manage the patient and when to refer. Also, inflammatory back pain will be elaborated in easy to digest way. A major advantage of this chapter is that carefully designed tables, diagrammatic presentations and illustrations were used to help practicing clinicians performing proper and adequate work up for patients with LBP. Objectives: 1. To present a comprehensive approach for diagnosis and evaluation of LBP according to current clinical guidelines. 2. To recognize the red flags of...
Words: 1359 - Pages: 6
...COVER STORY: INTERNAL FRAUD CASE STUDY Prepare a two-to-three page case study report on the following case: COVER STORY: INTERNAL FRAUD on pages 104-106 in Chapter 4: Billing Schemes of the Fraud Examination text by Wells. Discuss the coincidences involved in this case study. Use the 2009 Global Fraud Survey (also located in Doc Sharing) for references concerning perpetrator, size of fraud, detection, and controls. This case is about the $4 million embezzlement fraud by an employee of a magazine publisher, and how the fraud was discovered. The type of fraud discovered was a billing scheme that was found on accident. A billing scheme is, “Any scheme in which a person causes his employer to issue a payment by submitting invoices for fictitious goods or services, inflated invoices or invoices for personal purchases.” 1 In this case, it just so happened that the new chief internal auditor decided to stop by the accounts payable department to collect a series of recently submitted invoices so that he could meet with the vice president to understand how the accounting codes work. In doing so, they found that a number of invoices had been forged. According to the 2010 Global Fraud Studies, “11% of the time, victim organizations either had to stumble onto the fraud or be notified of it by a third party in order to detect it.” 2 With coincidence one, the investigation revealed that the forgeries were coming from the painting operations in its facilities department, in which was overseen...
Words: 653 - Pages: 3
...different, but not necessary incompatible perspectives on corpus data. Qualitative analysis: Richness and Precision. The aim of qualitative analysis is a complete, detailed description. No attempt is made to assign frequencies to the linguistic features which are identified in the data, and rare phenomena receives (or should receive) the same amount of attention as more frequent phenomena. Qualitative analysis allows for fine distinctions to be drawn because it is not necessary to shoehorn the data into a finite number of classifications. Ambiguities, which are inherent in human language, can be recognised in the analysis. For example, the word "red" could be used in a corpus to signify the colour red, or as a political cateogorisation (e.g. socialism or communism). In a qualitative analysis both senses of red in the phrase "the red flag" could be recognised. The main disadvantage of qualitative approaches to corpus analysis is that their findings can not be extended to wider populations with the same degree of certainty that quantitative analyses can. This is because the findings of the research are not tested to discover whether they are statistically significant or due to chance. Quantitative analysis: Statistically reliable and generalisable results. In quantitative research we classify features, count them, and even construct more complex statistical models in an attempt to explain what is observed. Findings can be generalised to a larger population, and direct comparisons...
Words: 635 - Pages: 3
...Case Study: CRAZY EDDIE 1-6 1. Key Ratios: 1987, 1986, 1985, 1984 Liquidity Ratios: Current Ratio: 2.4062, 1.3985, 1.5626, 0.9287 Quick Ratio: 1.4044, 0.5982, 0.7680, 0.1499 Solvency Ratios: Debt to Assets Ratio 0.6837 0.6643 0.6359 0.8298 Times Interest Earned 3.6169 30.3927 28.2877 14.9253 Long-Term Debt to Equity 2.1617 1.9786 1.7462 4.8755 Activity Ratios: Accounts Receivable Turnover 32.5026, 116.7711 49.7515, 52.7208 Inventory Turnover Ratio: 4.98, 3.55, 1.89, 1.95 Looking at the key ratios during that period there were a lot of red flags. The audit risk for Crazy Eddie would be very high. Some of the major red flags were inventory turnover in 4 years went from 4.98 to 1.95. That shows that some of the accounting was incorrect. Some of the other red flags are the amount of accounts receivable. 2. a. Visit the actual store without telling them and check the inventory in place to compare with the false amounts on the inventory count sheets. b. Contact different vendors, creditors and supplies to verify they received payment from Crazy Eddie. Also confirm with the banks and creditors about the notes payable account then trace that information to the general ledger. c. Observe the recorded sales from authorized shipping and approve the customer orders and monthly statements to customers. You have to also make sure there is a separation of duties between handling the cash and reconciling the bank accounts. Therefore the same person is not doing both...
Words: 647 - Pages: 3
...Bernie Madoff Fraud Case Bernie Madoff Fraud Case Introduction One of the largest fraud cases of all times is that of the “Bernard Madoff Case.” According to Armstrong (2008), “for a number of years Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. This he did by offering extraordinary returns to investors, until his scheme eventually reached a staggering $50 billion under “management.” Within this paper, efforts will be made answer a number of questions, including how was this fraud executed; who were the perpetrators, accomplices and victims; how was the fraud discovered; what were some of the possible red flags; and what role did the SEC play in discovering the fraud. In addition to this, mention will be made of how the case was resolved and what are some of the measures that could have deterred or prevented the fraud from occurring in the first place. Given these harsh economic times which we live in, all efforts have to be made to enforce strict rules and regulations within financial institutions – so that investors and other stakeholders’ interests are protected. Had there been closer attention given by the Securities Exchange Commission and other regulators to the ‘red Flags’ associated with Madoff and his firm, then so many persons would not have lost billions. Bernard Madoff Investment Securities (BMIS) Founded in 1960...
Words: 2829 - Pages: 12
...Fraud Auditing and Different type of fraud Introduction Over the years, the role of auditors become increasingly important especially in a capitalist economy as the process of wealth creation and political stability depends heavily upon confidence in processes of accountability and how well the expected roles are being fulfilled. An auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing. The most frequently debated areas amongst auditors, politicians, media, regulators and the public is where the fraud is coming from and by whom. This disagreement has been especially tinted by the collapse of big corporations like Enron and WorldCom. The unforeseen fall of Enron and WorldCom traumatized the world as both of these companies received clean bills of health from their auditors immediately prior to their for bankruptcy. Type of fraud Fraud itself comprises a large variety of activities and includes bribery, political corruption, business and employee fraud, consumer theft; network hacking, bankruptcy and divorce fraud, and identity theft. Many find it helpful to separate between internal and external fraud. Internal fraud is usually found by internal auditors. In the Statement of Auditing Standards 99, it’s defines fraud as an intentional act that results in a material misstatement in financial statements. There are two types of fraud considered: misstatements arising...
Words: 2588 - Pages: 11
...RED, WHITE, BLUE AND YOU Or, The Color of Politics An Essay by Charles Ebeling Presented at the Chicago Literary Club Election Eve, November 5, 2012 Copyright 2012 Charles Ebeling Dedicated to the memory of my good friend and neighbor Marshall J. Goldsmith Who was my guest at the Literary Club, October 24, 2011 Some us recall a great 1986 film called “The Color of Money,” and no, cynics, it wasn’t about politics. That film earned Paul Newman the Oscar for Best Actor as a pool hustler and stakehorse, who enjoyed a glass or two of J.T.S. Brown Kentucky bourbon, my favorite beverage from college days. But, unless I’ve missed a documentary or foreign film along these lines, I haven’t yet seen a dramatization called “The Color of Politics.” Yes, there is such a thing as “The Politics of Color,” but as social commentary, not as a film title. “The Color of Politics” is equally real though, and has a long history. I first dabbled in the palette of politics on election eve, 2008, when I presented before the club on that occasion an essay I’d titled “One Collage Too Many,” painting...
Words: 2285 - Pages: 10
...Ethics Case Study HCS/335 Ethics Case Study There are many situations in which ethics come into play, especially concerning the healthcare industry. Day-to-say operations require employees to know how to handle certain situation in the most ethical way possible. The refill of a controlled substance such as Valium, an antidepressant medication, is just one example of how knowing what the responsible and ethical thing to do can be crucial in the workplace. Jerry McCall currently works as an office assistant within the medical practice of Dr. Williams. Jerry has professional training as both a medical assistant and as an LPN. On this particular day Jerry is covering for a receptionist during their lunch break by answering any phone calls that the medical office receives. One of the phone calls that Jerry answers is in regards to a patient who states they must have a refill on their prescription od Valium. The patient states that the prescription must be called into his pharmacy right away because he is leaving for the airport in 30 minutes. The patient also states that Dr. Williams is a personal friend and always supplies him with valium when he has to fly. Jerry is currently the only employee at the office that can make the decision of what to do (Fremgen, 2009). The first thing that needs to be addresses in this situation is whether or not Jerry’s medical training qualifies him to issue the refill of this medication. Although Jerry has medical training...
Words: 737 - Pages: 3
...operational to the executive level. Methodology: Observation to other cases and study on Crisis Management model. Results or Findings:The evolution of crisis management that focuses on prevention rather than action after incidents happen. Body of Knowledge: The whole idea of the paper has been divided into sub-topic below: 1. The event approach. This event approach led to a very logical concept of traditional crisis management focus on incident response like what to do when a crisis happen and what to prepare. Such functional activities are critically important for successful organizational crisis response and recovery from unexpected event that threaten to disrupt an organization. This traditional event approach typically positions crisis management structurally alongside operational or technical level such as security or emergency response, often with public affairs tactically in support for media or community relations. 2. The process approach. After this years, trend for crisis management to evolve beyond this operational response and this reshaping crisis management which has led to the need of organizational design. This awareness that proactive managers can and should take steps to avoid a crisis happening in the first place. This has led to accept crisis management as a part of a process range which build on recognition like most crises are not sudden events but follow a period of precognition and red flags. Also leaders and managers have a wide choice of proactive processes...
Words: 959 - Pages: 4
...Accounting: Focus on the Red Flags Written by Richard M. Rockwood May 2002 © Copyright 2002, FocusInvestor.com. All rights reserved. This material is for personal use only. It is a violation of federal copyright law to reproduce part or all of this publication without written permission from FocusInvestor.com. The goal of this short article is to show the investor examples of how companies can manipulate their reported earnings. This article also provides information on what warnings signs to look for. The article has taken information from a variety of sources in order to provide the reader with a quick overview of accounting red flags. Focused investors practicing portfolio concentration should be particularly aware of these issues. I have written the article for the individual investor who has an intermediate level of accounting knowledge. That being said I believe the beginning investor with only a moderate understanding of accounting will benefit from a close reading of this article if for no other reason that to understand what elements of accounting they should study more closely. While this article focuses on accounting issues all investors should investigate the management team of a company before investing since the management team has such a strong influence of any companies operations and how they report their results. To this end I would strongly urge all investors to first study the way management treats their shareholders. Do they provide...
Words: 3529 - Pages: 15
...Diyonka Massey Magan Calhoun AIS 3710 22 February 2013 Bernie Madoff Case Study Throughout history, people have done unethical things dealing with money. In 2008, the man known for running a massive Ponzi scheme, known as Bernie Madoff, was arrested and charged with criminal securities fraud, and sentenced for a hundred and fifty years in prison. Bernie Madoff continued his scheme for thirty years because his company was the largest market maker on NASDAQ. He had an impressive rate of returns that his firm earned annually, and the Securities and Exchange Commission did not oversee the stock market and protect investors. Madoff also had flawless credentials. His scheme was so clever that he knew he could only aim toward the investors that were unlikely to question his investment strategy. It affected his personal life, because he wanted to have a regular life like others and not have to live with his conscience telling him it was not right. Professionally, he had it made because everyone wanted to be a professional business man like him. Madoff’s investors kept the cycle going because they thought like every other person that gave their money to a man that they had never met. The society and business today has changed tremendously. Every business after Madoff Securities were given strict procedures they have to follow by the government. Madoff’s personal and professional characteristics made him become a better individual. It brought together buyers and sellers of investments...
Words: 660 - Pages: 3
...fraud includes four essential elements: 1. A material false statement 2. Knowledge that the statement was false when it was spoken 3. Reliance on the false statement by the victim 4. Damages resulting from the victim’s reliance on the false statement In the broadest sense, fraud can encompass any crime for gain that uses deception as its principal technique. This deception is implemented through fraud schemes: specific methodologies used to commit and conceal the fraudulent act. There are three ways to relieve a victim of money illegally: force, trickery, or larceny. Those offenses that employ trickery are frauds. The legal definition of fraud is the same whether the offense is criminal or civil; the difference is that criminal cases must meet a higher burden of proof. For example, let’s assume an employee who worked in the warehouse of a computer manufacturer stole valuable computer chips when no one was looking and resold them to a competitor. This conduct is certainly illegal, but what law has the employee broken? Has he committed fraud? The answer, of course, is that it depends. Let us briefly review the legal ramifications of the theft. The legal term for stealing is larceny, which is defined as “felonious stealing, taking and carrying, leading, riding, or driving away with another’s personal property, with the intent to convert it or to deprive the owner thereof.” In order to prove that a person has committed larceny, we would need to prove the following four...
Words: 5045 - Pages: 21
