Why Fraud Is The Most Common Reason?

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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 (Albrecht et al, 2014). 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 (Association of Certified Fraud Examiners, 2012). Traditional fraud triangle theory explains that propensity of fraud occurring in an organization lies on three critical elements, which are Pressure, Opportunity, and Rationalization (Albrecht et al., 2014). Pressure is the driving force behind most fraud being committed (Albrecht et al., 2014). It is…show more content…
Asset misappropriation can be broken down into several “schemes” (Association of Certified Fraud Examiners, 2012). Revenue and cash receipt scheme which is the skimming or stealing of cash assets before they are been recorded in the accounting record or the theft of merchandise or donated items. Purchase and disbursement scheme which is mainly credit card abuse, and involves using organization credit card for personal use or copying donors card number for illegal usage and fictitious vendor scheme which involves issuing fake receipt to claim payment from the organization. Payroll and employee expense schemes involve the continued payment to terminated workers, overstating employees working hours, and fictitious expenditure fraud. The existence of external fraud is not as common as internal fraud or external theft but occurs in the following forms: fraudulent billing by vendors, which involves double billing, failure to deliver purchases, or price gouging. Financial assistant fraud, involves when financial aid is granted in order to support a project that is actually nonexistent. Sub recipient fraud is the reporting of fraudulent data or program costs to the organization/business that made the award/provided funds for the project. Fraud can been committed at all levels from the CEO, managers, CFO, financial staffs, and fund-raisers (Association of Certified Fraud

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