Corporate/Commercial Fraud

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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... ... middle of paper ... ...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).
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