Case study
An accountant worked at two accounting firms in an extent of six months. She gambled online very regularly.
She was employed in the tax department of both of these firms, and negotiated issues related to tax, that clients had in their institutions.
In some occasions, the client`s payment of tax, needs to be rightfully decreased. The accountant has the authority to submit claims to reduce tax payments on behalf of her clients.
If their tax has already been paid, the government department that administers and gathers tax in the United Kingdom, (Her Majesty`s Revenue and Customs tax) repays the overpayments, when a claim is made by an accountant in a firm.
In a three month span, in the first firm, certain clients were informed that
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Instead, she stole additional cash from the clients. The fraud and theft executed, was a consequence of weak internal and accounting controls of cash,in both of the accounting firms. Rotation of duties should have been enforced, when submiting claims, so that each employee in charge of this, knows the clients that claims are proposed for,and whether the claims are legitimate and valid. This way, diversion of cash by means of personal bank accounts will be exposed and revealed as well. Also, there should be a division of duties, where before claims were submitted to the government tax department, they are examined by an executive of the firm. Credit cards and confidential credit card information of not only clients but anyone in the firm should not be given to accountants or other employees, unless they are under …show more content…
The general manager at the cafe, used sales skimming, where she overcharged customers, pocketed and embezzled the extra cash, but recorded sales in their initial amounts. Apart from diverting client`s cash into her own bank accounts, the accountant in the second case, stole money from credit cards, that she held for her job. She did this without any approval or initiation from the credit card owners.
In both the cafe and the accounting firms, controls of accounting are inadequate, and the employees who carried out fraud in both cases took advantage of this. Therefore, white collar crimes have taken place in both cases. But, there were more flaws in the accounting controls of the cafe businesss, than that of the accounting firms.
One of the main internal controls of cash, that is deficient in both establishments, is the division and rotation of duties. If they were implemented, sales skimming, fictitious records and illegal diversion of cash could have been
Andrea’s second option is to inform the limited partners about how misrepresentations of Skyline Views’s financial statements are permitting Ed to claim a higher management fee; this decision will fulfill her due diligence obligation to the limited partners while maintaining her integrity as a certified public accountant in supporting the American Institute of Certified Public Accountants Code of Professional Conduct. After informing the limited partners, it would not be her responsibility as the limited partners would choose a necessary course of action against
Cash management has several weaknesses regarding segregation of duties. The office secretary should not receive the cash and prepare the cash listing and conduct the daily deposit. These duties should be split up so that the secretary cannot misstate the amount of cash received and be able to falsify cash receipts and daily deposits.
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.
Proverbs 10:9 states: “People with integrity walk safely, but those who follow crooked paths will slip and fall” (New Living Translation).” This Scripture suggests that individuals who do not walk in integrity follow “crooked paths.” They walk in ways that are not morally sound, pure, and honest—but in ways that are corrupt. Clients want accountants with integrity. Thus, integrity is critical to the public trust. As a matter of fact, one of the general definitions of integrity provided by the AICPA Code is that it is a quality from which the public trust derives. Also, it is an element of character fundamental to professional recognition, and it requires members to be (among other things) honest and candid within the constraints of confidentiality (Duska, Duska & Ragatz, 2011). Integrity in the accounting profession involves adhering to the rules and principles of the profession. This includes remaining free of conflicts of interest and maintaining client relationships in which the accountant can remain objective in discharging his or her responsibilities. This requires independence in fact and in appearance as mandated under section 1.200.001.01, Independence Rule the AICPA Code. In other words, no one should be able to view the accountant as being biased with respect to a client’s financial reporting due to an improper client relationship. Lack of integrity in accounting practices has been, and continues to be, a key element in the downfall of many institutions which has hurt the public trust in the accounting
The Hollate Manufacturing case provided by Anti-Fraud Collaboration has well illustrated how several common issues in an organization contributed to the fraud’s occurrence. These issues can be categorized into two major groups: ethical culture (internal aspect) and internal control system (external aspect). By taking effective actions to enhance these two aspects, an organization can protect itself against the largest frauds, which result in financial and reputational damage.
Along with the huge amounts of power that come with big corporations, comes the temptation of money and the corrupt nature of wanting to attain more at any and all costs. During the early 1900’s, a sect of journalists and writers became frustrated with the corruption found inside corporations and took actions to correct this behavior. In what is now known as the work of the “muckrakers”, large corporations were exposed for “a variety of illegal, unethical, harmful, and otherwise abominable and scandalous practices” including “corruption in municipalities, unhealthful, inhumane conditions in food-processing plants, dangerous conditions in coal mines, illegal and deceptive advertising, the abuse of mental patients by staff, the exploitation of factory workers, the running of ‘sweat shops’ (Goode, White Collar Crime)” and the list continues. However, while the new information characterized this type of behavior as “deviant” it was not in fact “criminal” since no laws were in place against such practices (Goode, White Collar Crime). In 1906, legislation was passed regulating the food processing industry and later, in 1916, the first child labor laws were passed (Goode, White Collar Crime). The term “white collar crime”, however, did not surface until 1939 (Goode, White Collar Crime). During a talk, given by Edwin Sutherland, before the American Sociological Society meeting, Sutherland used the term “white collar crime” to describe “crimes committed by a person of respectability and high social status in the course of his occupation” (Legal Information Institute). The types of crimes that are typically associated with this phrase today include, but are not limited to; bank fraud, blackmail, bribery, counterfeiting, embezzlement, extortion, forgery, insider trading, investment schemes, larceny, money laundering and tax evasion. Today, the white collar criminal,
Though many ‘people are aware of what corporate crimes are there are still many who do not know’. A corporate or white-collar crime can be described as “a crime committed by any person through the venue of his or her employment that benefits the business”, ‘this can mean that a corporation does an illegal act of indifference to better the corporation’. It is argued that corporate crimes are more harmful to the general public than acts of intention. When it comes to these ‘crimes it can be said that many of the victims that it affects do not realize, that they are being affected and if and when they do know it is argued that they are told that it is due to a misfortunate accident and that there is no one to blame for the Act’. Many criminologists such as Sutherland argued that corporate crime is something
I believe that asset misappropriation by accounts payable fraud is occurring at Wayland Manufacturing Company due to a lack of proper internal controls. Making the company’s Chief Accountant responsible for additional day-to-day functions provides him with opportunity to commit by creating fictitious vendors with his information and then creating fictitious invoices. Newbaker can then conceal his fraud by approving the invoices for payment. Employees working at an organization for more than five years are more likely to commit fraud. Therefore, Newbaker’s six-year history with the company has made him trustworthy and very knowledgeable, which could indicate involvement in asset misappropriation. The high employee turnover could represent a past fraudster leaving before getting caught or employees refusing to continue with the asset misappropriation. In addition, the varying monthly accounts payable transactions ranging from the lowest being April 2014 and
But in order the books should look a little acceptable and no one should come up on their fraud instantly and specially the lower level bookkeeping team by doing their day to day entries and knowing that utility expenses is not a capital improvement they had to do it in a professional way
Crime comes in different ways, shapes, and forms. From corruption to murder, the seriousness and blameworthiness varies from crime to crime. The most common factor of all crime is that it is illegal. The problem with prosecution is that some crimes can find loopholes around the rigidity of the laws created. This is the hardest for white collar crimes. With so many types of white collar crimes, it is hard to understand where it belongs on the scale on seriousness and blameworthiness and how to prosecute. With white collar crimes, they are most commonly seen as “victimless” or “paper” crimes, since they do not involve physical harm to the people included. With so many types available to analyze, the purpose of this paper is to focus on bribery, perjury, and fraud. When it comes to white collar crimes, or any crime for that matter, we do not only need to focus on what causes it and society’s reaction to it. We need to look into prevention of it and being able to stop it before it even starts.
Phar-Mor was known as one of the major discount chain retailers in the late 1980’s - early 1990’s. It was founded by Mickey Monus, a gambler in nature, who with the help of senior management was “cooking the books” for years to cover up his loses. The reason why senior management agreed to do this fraud is the belief in unique ability of their leader to fix everything later on. This case is known as one of the biggest accounting frauds in the corporate history of the U.S. This paper will analyze who was affected by this fraud, the motives behind it and what systems of control failed to prevent it.
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.
At the top of the charts for white-collar crime are the three B’s: Bank Fraud, Blackmail, and Bribery (Types and Schemes, 2014). Other types of white-collar crime are Cell Phone and Computer Fraud, Counterfeiting, Embezzlement, Forgery, Extortion, and Money Laundering.
Champion, D 2011, ‘White-collar crimes and organizational offending: An integral approach’, International Journal of Business, Humanities, and Technology, vol. 1 no. 3, pp. 34-35.
Auditing has existed since the beginning of human society. Auditing was used mostly for the detection of fraud and was done through extensive detailed examination from ancient times until the late nineteenth century (Lee, 1988). Fraud was a great concern during the early history of auditing, because internal controls were not used or not used effectively until the twentieth century. The late nineteenth century was a turning point in auditing history, when laws like the English Companies Act of 1862 were enacted.