Ethics : Ethics And The Legal Ramifications Incurred

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Analysis of Ethical Questions Related to Fraud Processes In examining the standards of ethics, or lack thereof, in cases of corporate fraud there are key questions to consider. These questions relate to ethics, the fraud triangle, and the legal ramifications incurred. It is important to examine the elements related to these key questions, in order to gain an understanding of the impacts fraud has upon all parties involved. This handbook provides information to gain an understanding of what ethical violations are at play and the impacts upon all involved parties resulting from those violations. Further provided is information regarding ethical issues when an awareness of the fraud is known, and what the reactions should be by the…show more content…
Whether the dishonest act involves fraud against a company, such as employee embezzlement, or fraud on behalf of a company, such as management fraud, the three elements are always present. Figure 1 illustrates the fraud triangle comprised of these three elements. Figure 1. Fraud Triangle Perceived Pressure Perceived Opportunity Each fraud perpetrator faces perceived pressure, and most often these pressures involve a financial need, although non-financial pressures, such as the need to report results better than actual performance, frustration with work, or even a challenge to beat the system, do sometimes motivate fraud. Some examples of perceived financial pressures that motivate financial statement fraud are financial losses, failure to meet Wall Street 's earnings expectations, or the inability to compete with other companies in the industry (Dunn, 2003). The pressure that applied to what John Rigas experienced in the Adelphia case related to living beyond one’s means, from greed. A fraud perpetrator must also have a perceived opportunity or they will not commit fraud. Even with intense perceived pressures, where there is the belief that fraud is typically caught and punished, and an executive rarely commits fraud. On the other hand, those executives who believe they have the opportunity, to commit and successfully conceal fraud, often give in to perceived pressures. Perceived opportunities to commit management fraud include such factors as a
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