Corporate/Commercial Fraud
The Royal Canadian Mounted Police [RCMP] classifies corporate fraud into two different categories: fraud by a company and fraud against a company (para. 5). The RCMP explains fraud against a company can happen through “misappropriation of corporate assets by a company senior officer or by staff” (para. 5). Employees defraud companies with methods such as “fictitious revenues, concealed liabilities and expenses, and asset or revenue understatements or overstatements” where as fraud by a company happens by “providing incorrect or misleading information to shareholders or regulators, including financial reporting fraud – where incorrect or misleading information is provided for individual financial gain” (RCMP, para. 5). The Federal Bureau of Investigation [FBI] breaks down corporate fraud into three categories based on the action of the fraudster or fraudulent company. These categories are falsifying financial information or accounting schemes, self-dealing by corporate insiders and obstruction of justice (FBI, para. 16).
The FBI’s self-dealing category would fall under the RCMP’s category of fraud against a company. Actions taken by a person who commits fraud by way of self-dealing include: “insider trading; kickbacks; backdating of executive stock options; misuse of corporate property for personal gain; and individual tax violations related to self-dealing” (FBI, para. 16). On the other hand, accounting schemes are fraud by a company, which include false accounting entries, trades and transactions with the purpose of improving the appearance of a company’s financial performance (FBI, para. 16). Concealing any of these activities from authoritative or regulatory bodies would be considered obstructi...
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...om http://www.sec.gov/news/testimony/2010/ts042010mls.htm
Securities and Exchange Commission [SEC]. (2010). Investor Complaints and Questions – FY 2010 Annual Complaint Data. Retrieved February 2, 2011, from http://www.sec.gov/news/data.htm
Singh, J., Kumar, N., & Uzma, S.. (2010). Satyam Fiasco: Corporate Governance Failure and Lessons Therefrom. IUP Journal of Corporate Governance, 9(4), 30-39. Retrieved February 14, 2011, from ABI/INFORM Global. (Document ID: 2170212581).
The Pak Banker. Ernst & Young 'hiding' Lehman troubles. (2010, December 23) Retrieved February 14, 2011, from ABI/INFORM Global. (Document ID: 2220249491).
Wall Street Journal (Online). Auditors Face Fraud Charge; New York Set to Allege Ernst & Young Stood By as Lehman Cooked Its Books. (2010, December 20). Retrieved February 15, 2011, from ABI/INFORM Global. (Document ID: 2217000931).
Securities and Exchange Commission. SEC Complaint Case 9:13-cv-80396-XXXX 2013. SEC Digital Archive. Web. 2 Feb. 2014
Throughout history there have been many white collar crimes. These crimes are defined as non-violent and financial-based crimes that are full ranges of fraud committed by business and government professionals. These crimes are not victimless nor unnoticed. A single scandal can destroy a company and can lose investors millions of dollars. Today, fraud schemes are more sophisticated than ever, and through studying: Enron, LIBOR, Albert Wiggan and Chase National Bank, Lehman Brothers and Madoff, we find how the culprits started there deception, the aftermath of the scandal and what our country has done to prevent future scandals.
Madura, Jeff. What Every Investor Needs to Know About Accounting Fraud. New York: McGraw-Hill, 2004. 1-156
The reasons for fraud all surrounded Satyam attempted to meet investor’s expectations. As Raju wrote in his letter to the board of directors, the gap between actual operating profit and the one listed in the books began to grow exponentially. As mentioned earlier, promoters owned a small percentage of Satyam, where foreign and domestic investors owned the greatest percentage. If Satyam slightly revealed its poor performance, it could result in a takeover revealing the company’s poor
The primary purpose of the “Statute of Frauds” (SOF) is to protect the interests of parties once they are involved in litigating a contract dispute (Spagnola, 2008). The relevant statutes are reliant upon state jurisdictions to determine whether the contract falls under the SOF, and whether the writing of the contract satisfies the requirements of the statute of frauds (Spagnola, 2008). However, all contracts are not covered under the SOF. In essence, for a contract to be deemed as legal by definition of the SOF, there must be verification of the following requirements for formation of the contract, which are as follows: (1) There must be least two parties to the contract, (2) There must be a mutual agreement and acceptance on the price to pay for goods and services offered, (3) The subject matter or reason for entering the contract, must be clearly understood by all parties to the contract, (4) and there must be a stipulated time for performance of duties under the contractual obligations (Spagnola, 2008). Lastly, there are five categories of contracts that are covered under the SOF, which are as follows: (1) The transfer of real property interests, (2) Contracts that are not performable within one year, (3) Contracts in consideration of marriage, (4) Surtees and guarantees (answering to the debt of another), and (5) Uniform Commercial Code (U.C.C.) provisions regarding the sale of goods or services, legally valued over five hundred dollars ($500.00) (Spagnola, 2008).
This report gives the brief overview of the concept of corporate governance, its evolution and its significance in the corporate sector. The report highlights various key issues and concerns that are faced by the organizations while effectively implementing and promoting Corporate Governance.
Embezzlement has become more common in the last few years. No one knows for sure whether the problem has increased due to the bad economy, less ethical behavior among employees or other attitudes toward the government or businesses in general. Charleston, South Carolina is no exception to the rising number of fraud cases. Every year more cases are being discovered and exposed to the public. One such case is the embezzlement of cash from a county owned garage. The embezzlement case of Martina Moultrie Richardson will be discussed as well as types of evidence desired in this case, methods/procedures for gathering the evidence and procedures for cataloging and maintaining the evidence.
Giroux, G. (Winter 2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75, 4. p.1205 (34). Retrieved June 16, 2011, from Academic OneFile via Gale:
Imagine losing your retirement funds or being a victim of a mortgage fraud because money from your bank account disappeared overnight! The 1996 report of the National Criminal Justice Commission estimated that the annual cost of white-collar crime is between $130 billion and $472 billion, seven to twenty-five times greater than the cost of conventional or street crime (Conklin, 2010, P. 71). White-collar crime in America is considered larceny committed by the wealthy, respected, and legitimate enterprise which is not set up or intended to go out of business like an ordinary fraud or con game. White-collar crime offenses may involve forgery, embezzlement, or fraud involving massive amounts of money. Offender’s commit fraudulent acts in the course of normal business practice, but is considered unethical and violates accepted accounting principles and mainly public trust. To help better understand the issue the essay will explain several incidents which are involved with white collar crime and how it hurts many individuals from families to businesses. Even though white-collar crime offender’s gain an increase in salary and may go unnoticed, the criminal justice system should continue to take a stance on white collar crime. Because mainly white collar crime is a serious invincible crime, laws that regulate white collar crimes are necessary, and impacts society's way of life. Additionally, a proposed suggestion will be presented to counter the identified problems and conclude final thoughts on white-collar crime. At the end of the day the goal to continue law regulations against white collar crime while maintaining public protection will be the driving emphasis behind this essay.
White-collar crimes and organizational structure are related because white collar-crimes thrive in organizations that have weak structures. According to Price and Norris (2009), the elites who commit white collar-crimes usually exploit weaknesses in organizational structure and formulate rules and regulations that favor their crimes. Makansi (2010) examines case studies to prove that white-collar crime is dependent on organizational structure. For example, the financial crisis that Merchant Energy Business faced in 2001-2002 occurred due to the liberal Financial Accounting Board, which failed to provide a standard model of valuing natural gas and fuel. Moreover, a financial crisis that rocked the securitization market in 2008 was due to fraudulence in the pricing of securitization products. These examples ...
CEO Kenneth Lay’s ambition for ENRON a company he had helped form went beyond the business of piping gas. Enron went to become the largest natural gas merchant in North America and the United Kingdom. But the reality is, this company business model never worked. This was a company that was so desperate to win Wall Street 's respect that it kept it stocks shares prices going up despite the losses it was incurring in order for executives to keep lining their own pockets. Over the course of this Case Assignment, I will identify the examples of financial reporting misconduct, I will explain the deontological as well as a utilitarian ethical perspective and lastly I will identify the stakeholders likely to be affected by that misconduct.
Dowd (2016) runs above and beyond with the clarification to state accounting fraud incorporates the change of accounting records in regards to sales, incomes, costs and different components for a profit motive, for example, boosting organization stock prices, getting ideal financing or maintaining a strategic distance from obligation commitments. Dowd is of the feeling that covetousness, absence of straightforwardness, poor administration data and poor accounting interior controls are a couple of explanations behind accounting fraud. (Dowd,
Securities Commission Malaysia. (2014). General Section: Audit Oversight Board. Retrieved March 26, 2014, from Securities Commission Malaysia: http://www.sc.com.my/general_section/audit-oversight-board/
The Tyco accounting scandal is an ideal illustration of how individuals who hold key positions in an organization are able to manipulate accounting practices and financial reports for personal gain. The few key individuals involved in the Tyco Scandal (CEO Kozlowski and CFO Swartz), used a number of clever and unique tactics in order to accomplish what they did; including spring loading, manipulating their ‘key-employee loan’ program, and multiple ‘hush money’ payouts.
For those who do not know what fraud is, it’s basically deception by showing people what they want to see. In business it’s the same concept, but in a larger scale by means of manipulating figures that will be shown to shareholders and investors. Before Sarbanes Oxley Act there was “Enron Corporation”, a fortune 500 company that managed to falsify their statements claiming revenues over 101 billion in a span of 15 years. In order for us to understand how this corporation managed to deceive the public for so long, the documentary or movie “Smartest Guys in the Room” goes into depth by providing viewers with first-hand information from people that worked close with or for “Enron”.