Fraud : Fraud And Fraud

1551 Words Mar 7th, 2016 7 Pages
Fraud Detection Paper

INTRO

Fraud has plagued the world of accounting since the establishment of the profession. Fraud can be committed against an individual or a business. In order to identify fraud, an auditor must be able to differentiate between what is considered fraud and what is considered error. Fraud as defined in our textbook as “intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.” On the other hand, error is “unintentional misstatements or omissions of amounts or disclosures.” This simply means that fraud and error can have the same affect on a company and its books, the main difference between the two is the intent of the perpetrator. This paper will explore the basic types of fraud, preventing and detecting fraud, an example of a major fraud committed in United States history and the governments reaction to the prevalence of frauds in the 1990s and early 2000s.

TYPES OF FRAUD

There are three basic types of fraud perpetrated by employees. They are misappropriation of assets, bribery and corruption, and fraudulent financial reporting. Misappropriation of assets is the theft or misuse of assets that belong to a company. Misappropriation of assets is the most common type of fraud; statics show that it has occurred in over 91% of fraud schemes. It is also the simplest type of fraud to understand and commit which might explain its prevalence in many business fraud schemes. Asset misappropriation is…
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