Cit Fraud Case Paper

In this case, there are several conspirators who is involved in the fraud receiving punishment from either SEC or federal government. Robert Levin, the AMRE executive and major stockholder, and Dennie D.Brown, the company’s chief accounting officer, were subject to the punishment in the form of a huge amount of fine by the SEC and the federal government. This punishment came from reasons. After AMRE going public, the company have the obligation to publish its financial reports but its performance did not meet expectation. The investigation by SEC shows that Robert took the first step of this scam, fearing the sharp drop of AMRE’s stock price because of the poor performance of company. He abetted Brown, to practice three main schemes to present a false appearance of profitable and pleasant financial reports. Firstly, they instructed Walter W.Richardson, the company’s vice president of data processing, to enter fictitious unset leads in the lead bank and they originally deferred the advertising cost mutiplying “cost per lead” and “unset leads” amount, so that they deferred a portion of its advertising costs in an asset account. The capitalizing of advertising expenses allowed them to inflate the net income for the first quarter of fiscal 1988. Secondly, at the end of the third and fourth quarters of fiscal 1988, they added fictitious inventory to AMRE’s ending inventory records, and prepared bogus inventory count sheets for the auditors. Thirdly, they overstated the percentage

The organizational structure of Phar-Mor was ineffective and lacked many control activities including: segregation of duties, authorization, documentary and IT controls. As a result, Phar-Mor’s president had a stronghold on certain upper level management and executives which gave him the opportunity to control the fraud and hide it from other members of the organization and supposedly Phar-Mor’s auditors, Coopers and Lybrand LLP.

Internal fraud consists in “a type of fraud that is committed by an individual against an organization. [Furthermore], a perpetrator of fraud engages in activities that are designed to defraud, misappropriate property, or circumvent the regulations, law, or policies of a company”[8]. Not only has the incidence of internal fraud increased in frequency because of the availability of sensitive information such as client details or confidential business documents; moreover, this type of fraud is found in various types of organizations, ranging from corporations, public service institutions and financial institutions. Our analysis will concentrate on the most common and prolific types of internal fraud, namely identity theft, insider trading, loan fraud and wire fraud. Interestingly, PriceWaterhouseCooper conducted a survey that revealed that the “demographics of a typical fraudster are as follows: males (85% of cases), 31-50 years (72% of cases), reached high-school level (50%), Bachelor’s or post graduate degree (50%) and middle or senior management (52%)”[9].

It is important to first gain an understanding of the various types of fraud, in order to aid understanding in regards to the prevention of fraudulent activity. This paper begins with a review of the definition of financial fraud, and identification of the different fraud types. Further, included is an examination of what motivates individuals to commit fraud, including an identification of some of the method in which people commit fraud. A discussion of the importance of the fraud triangle, and how rationalization contributes to fraud is a key area of focus. Finally, there is an examination of some controls that prevent and detect fraudulent behavior, including the value and importance of understanding the nature of fraud for

Due to his expert working experience in the first 5 years in the back office, he has sufficient knowledge on how to conceal the fabricated support document and deal with the system that might expose his fraud and fabricated support document. The cases indicated that he knew how the internal control system took place in the company. For instance, he knew when the system checks and reconciliations took place. Thus, he was erased all the fake trades before the system checks and re-created those trades after the system

Ron Bent should have thoroughly evaluated the whole situation. The cases study clearly stated that the organization was facing a crisis. Which was a downward turn of sales in the past two years. This decline in sales was the reason behind Ron Bent having to lay off twenty percent of his employees. Productivity was dropping, product-quality issues had begun to surface, and employee morale was low, I believe all these issues were all occurring because of the lay off in employment. They have faced this situation before, the solution to that previous issue was the Scanlon plan. The Scanlon plan was created as a company-wide incentive program, in the past it was critical in building morale, product quality, increasing productivity. Leading in too a huge turnaround for the company. That was not the case this time around, into the second year of decline in sales. Ron Bent got rid of the Scanlon plan. While not taking in to consideration that the decline in sales was the root problem in the

In this course, students are introduced to the conduct of fraud examinations, including a discussion of specific procedures used in forensic accounting examinations and the reasoning behind these procedures. Topics include an overview of fraud and abuse, forensic evidence, substantive procedures for cash outflow irregularities, substantive procedures for asset irregularities, financial statement fraud, and examination reporting.

This subject company in this case study is WoolEx Mills. The top management team at the Mills had to act fast to prevent the accusations charged upon them, so that they may venture deep into the United States market. In the process, they had to act in a way that will present the company’s financial statements; cash flows in a way that they did not show any suspicious fraudulent activities. The type of fraud in this case study is known as manipulation of accounts which involves the act of offering the accounts in the way they are not in reality.

Every fraud scheme involves opportunities as it becomes the means for the perpetrators to commit the crime. Perpetrators actively pursue opportunities such as analyzing the circumstances that enable the fraud to be committed without getting caught. Pressures to commit fraud are based on various individual factors; for example, debt, status quo, or greed. The rationalization of the crimes are as demoralizing as the crimes, which relate to the pressure the perpetrator is conduced to in committing the crime. Tax fraud, divorce and bankruptcy fraud can all highly relate to the triangle fraud’s underlying factors in providing the source of the crimes that are presented in judicial court systems despite the notorious organizations or ex-love past

The general purpose of this research is to determine the cause for financial statement fraud. In addition, the purpose is to review ways fraudulent behavior can be detected and prevented. Lastly,

But after all, the bank had given Nick Leeson virtually free rein and let him do both the back and front office work which was not relevant. The controlling at Barings had failed because the “88888 account” Nick Leeson did not appear on trader reports. So the Barings should given so much responsibility to one single man.

According to the internal inspection report of the Societe Generale, certain control was absented throughout a period of time. This absent of certain control indicated that a fraud is occurred and alerted the company about it. However, even though Societe Generale is able to identify the problem, the compliance inspector of the company only conducted a routine reviews and did not have a deep detail checking on issues. Besides, the compliance inspector did not asking for any additional information from Kerviel and simply accepted Kerviel’s claims without putting any effort to validate it. Due to this, its shows that the compliance inspector of the bank is failed to identify the cause of the problems occurred which caused by the lack of

Fraud is defined as a deliberate misrepresentation that causes a person or business to suffer damages, often in the form of monetary losses through deception or concealment. And Occupational Fraud as defined by the ACFE is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets. Traditional fraud triangle theory by Donald Cressey explains that propensity of fraud occurring in an organization lies on three critical elements which are Pressure, Opportunity, and Rationalization.

A number of financial statement frauds went undetected from auditors in past and attracted a high profile attention. The businessmen add fake assets or transfer the assets of companies to their personal assets and result in accounting scandals when the affected companies are bankrupted or are even close of bankruptcy. Just to mention a few names, accounting scandals of Enron, AOL Time Warner and Xerox are among the hottest accounting scandals of the century. This means that despite presence of professional auditors accounting scandals happen and there is a need to learn from the mistakes of the auditors who overlooked these activities. In this report the case study of Xerox is analyzed in detail to highlight violations of accounting principles and present an example from which lessons can be learnt for the future.

A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud