Information Technology Manager Acting As A Purchasing Agent

In the past few years, enterprise integrity has come up on a regular subject of conversation. In the past ten years only, we have seen numerous situations associated with collaborative scams which have shaken the people 's trust in businesses and also the general economic climate. A few of the many salient frauds are the WorldCom and Enron 's scams, the ponzi scheme perpetrated by Bernard Madoff 's, the latest accusations of Goldman Sachs tricking option traders to guarantee the company 's personal profit. Incidents such as these designed us all, as upcoming corporation professionals as well as market leaders, think about ethics and its particular function in the commercial world (Gross, 2010.)

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].

In fraud committed against organizations, the victim of fraud is the employee’s organization. In frauds committed on behalf of an organization, executives usually are involved in some type of financial statement fraud; typically, to make the company’s reported financial results appear better than they actually are. In this second case, the victims are investors in the company’s stock. A third way to classify frauds is via the use of the ACFE’s occupational fraud definition, “the use of one’s occupation for personnel enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (ACFE, 2010). The ACFE includes three major categories of occupational fraud: asset misappropriations involves the theft or misuse of the organization’s assets, corruption involves the wrongful use of influence in a business transaction in order to procure benefits contrary to their duty to their employer, and fraudulent financial statements involving falsification of an organization’s financial statements for personal gain.

* U.S. governmental oversight of accounting fraud and abuse and its effect on the company Potential corruption schemes to be aware of in the company

The impact the Foreign Corrupt Practices Act had on society was pleasant since it restored buyer confidence in the United States and restored the integrity of the United States market by implementing honesty in transactions. Yet it imposed too many disadvantages for the economy and corporations. The Foreign Corrupt Practices Act focuses on large fraudulent payments made by a business, therefore anyone involved in the financial, accounting, and executive department are impacted the most. Other major stakeholders affected include the board of directors, shareholders, employees, government officials involved, and foreign officials or foreign companies involved. Everyone is affected because the codes of conduct, and the companies’ values needed

A study conducted by the Association of Certified Fraud Examiners (ACFE) surveyed 959 cases of reported occupational fraud between 2006 and 2008. The report broke fraud into three categories: fraudulent statements, asset misappropriation, and corruption. Ninety-nine of the 959 cases reported financial statement fraud with a median loss of two million dollars, making it the most costly of the fraud categories. In general, the study found that publicly traded companies that had implemented SOX controls reported fewer losses (70 to 96 percent) than those who had not implemented SOX controls. These results imply that implementation of SOX controls are directly related to a reduction in theft and other fraudulent behaviors. Surprisingly, it was noticed that in companies where management must certify the financial statements, fraud took approximately three months longer to detect than in those companies where management was not required to certify the financial statements. However, due to the complexity and relative newness of SOX and the complexity of the businesses and the ingenuity of people, it is not surprising that SOX has not been a booming success. Hopefully, over time, all the wrinkles will be ironed out allowing for deterrence or immediate detection to be attainable. (Rappeport,

During a fraud examination process. I would start by reviewing pay rates of the 125 employees in the company. Examine payments made to employees and payments made to vendors, then vendor invoices and match vendor invoices with contracts. See who is signing the vendor contracts. Review the internal controls policies of the company and read upon who should be the one signing off on the vendor contracts. The person handling the vendor contracts can be asked to take vacations. Then, monitor the incoming and outgoing wire payments from the company’s banking

Embezzlement is a common crime in large corporations, especially those where Chief Financial Officers (CFOs) operate under autonomy on fiscal activities. The organization that called upon us is huge in terms of personnel employed; however, their Information Technology (IT) department isn’t staffed or trained adequately for thoroughly investigating crimes of this nature. It is this reason the organization has reached out to the police department; where I hold the position as Chief of the digital forensics division, whose division with spearhead the investigation procedure. Capturing all the evidence used to commit crime will be tedious & complicated, but well within our sphere of capabilities (Nelson, Phillips, & Steuart, 2010, p. 14).

3. The current global recession is so severe that all these factors (motivation / pressure of external circumstances, the ability to commit fraud, and the ability to justify action) became more relevant than ever. A threat to the economic survival of the company or person, the line between acceptable and unacceptable behavior may seem to some people is much less clear. Now is becoming more common this type of fraud, as a distortion of the financial statements. A significant increase in crimes of this type can be explained by failures in the control system, which occur as a result of cost reductions. Impact and pressure associated with the need to achieve the targets against the background of an increasingly complex situation.

Occupational fraud or corruption can be defined as showing the divergent behavior in the workplace due to break in the psychological contract. Occupational frauds are of three types includes asset misappropriation, corruption and fraudulent statements. Holtfreter (2005) asserts that asset misappropriation and corruption are equally likely to be committed by males and females, whereas fraudulent statements are distinctly linked to male and also connected to employees holding higher positions in organisations. Insider manipulation and

Fraudulent, erroneous, and illegal acts committed by a public company, usually at a managerial or executive level, have been a very serious problem for many years and have prompted development of strict and updated regulations, such as the Sarbanes-Oxley Act, in an attempt to prevent these occurrences. Unfortunately, these new or updated regulations are not enough to prevent these acts from happening, thus not alleviating the auditors of their responsibility to detect fraud. Some methods that management and auditors can employ to prevent and detect fraud, errors, and illegal acts are: improving knowledge, improving skills,

reporting fraud should be increased. Fraud costs companies in the United States $652 billion dollars annually. Fraud is a widespread problem that affects every organization regardless of size, location or industry. There has been an 80% increase in FBI corporate fraud cases since 2003 (US Department of Justice, 2008) and a 26% increase in U.S. identity theft convictions since 2007 (Identity Theft Task Report, 2008). Audit teams need to be trained to incorporate more forensic accounting procedures into their audit practices and retain more forensic

2. What measures can and should be taken to make it easier for corporate employees to “blow the whistle” on a fraudulent scheme they uncover within their

I am recommending to improve the internal control and train employees in fraud awareness. Improving internal control can be done by developing a strong system of internal controls that implement a proper segregation of duties between systems function. They should also require transactions and activities to be authorized by appropriate supervisory and have the system authenticate the person, and their right to perform the transaction before allowing transaction to take place. They should have

Over the past two years, corporate America has endured a plethora of fraudulent acts committed by those of high status within their respective corporations, most of which involve internal fraud. Internal fraud has two main aspects, misappropriation of assets and fraudulent financial reporting, with the focus of this discussion lying within the former. Misappropriation of assets is defined as fraud for personal gain. It is the most common type of fraud found among employees and frequently includes theft of cash and inventory.