Fraud Detection The Value Of Internal Control - 6023 Words

EMPIRE STATE COLLEGE OF THE STATE UNIVERSITY OF NEW YORK AUDITING FINAL PAPER FRAUD DETECTION: THE VALUE OF INTERNAL CONTROL by OLUIMI AKINDEINDE 2012 Abstract Fraud is present in all aspect of life. It is very common in business environment. Business organizations try to do their best to ensure that fraudulent practices do not put them out of business. Case study is used to establish the value of internal anti-fraud control and to point out that a small business can implement it with common sense and solid auditor’s advice. Introduction Occupational fraud poses a large threat to small businesses (ACFE, 2012). Research data suggests that the smallest organizations suffered disproportionately the largest median†¦show more content†¦Victim organizations that had implemented any of sixteen common anti-fraud controls experienced considerably lower losses and time-to-detection than organizations lacking these controls. Nearly half of victim organizations do not recover any losses that they suffer due to fraud. As of the time of the survey, forty-nine percent of victims had not recovered any of the perpetrator’s takings. The report further showed that seventy-seven percent of all frauds in the study were committed by individuals working in one of six departments: accounting, operations, sales, executive/upper management, customer service and purchasing. Most perpetrators of occupational fraud are first-time offenders with clean employment histories. Approximately 87% of the perpetrators had never been charged or convicted of a fraud-related offense, and 84% had never been punished or terminated by an employer for fraud-related conduct. In eighty-one percent of cases, the perpetrators displayed at least one behavioral red flag among behaviors that are often associated with fraudulent conduct—living beyond their means, financial difficulties, unusually close association with vendors or customers, and excessive control issues were the most common behavioral warning signs addressed in theShow MoreRelatedWeek 1 Acc5561135 Words   |  5 PagesInternal Accountant’s Report to Management ACC 556 This report will present the necessary information needed to understand and decide whether to perform a full financial status review before proceeding with the bid. The information covered will include: * The effect of occupational fraud and abuse on the company * 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 Recommendation of typesRead MoreFraud, Corruption, Theft, Misappropriation, And Fraud1738 Words   |  7 PagesThere is no specific definition for fraud if looked at from different perspectives. The term fraud is used to describe acts such as deception, corruption, theft, misappropriation, false presentation, bribery, fault partnership, forgery etc. Some may even describe fraud as practical process of deception to gain an advantage, or to cause loss to another entity or individual. While some people might not even anticipate to commit fraud, others might do so if they contemplate they have a way to be covertRead MoreInvestigating The Failure Of Fraud Detection982 Words   |  4 Pagescrimes that can last for months or even years before detection. It has been identified that there are three factors that often combine to lead individuals to commit fraud: pressure or an incentive to engage in fraud, a perceived opportunity and the ability to rationalize fraudulent behavior. Because f raudulent activities are usually well planned and intentionally covered up, it is difficult for the auditor to detect these incidents. Although fraud does not happen as often as misuse and error, whenRead MoreDonald R. Cressey s Theory Of The Occupational Offender1163 Words   |  5 Pagespoint, they started embezzling from their employer (Wells, 2013, p. 13). Cressey’s hypothesis was that embezzlers or â€Å"trust violators† had three common characteristics (Wells, 2013, p. 13). These three characteristics would later become known as the â€Å"fraud triangle† (Wells, 2013, p. 13). Frist, the trust violator had to have a â€Å"non-shareable financial problem† (Wells, 2013, p. 13). A non-sharable financial problem was a problem that the embezzler, for whatever reason, wouldn’t share with someone elseRead MoreThe Data Analysis, Finding, Discussion2671 Words   |  11 Pagescompared with the systems of internal controls prescribed by the management of the organization using related literature as basis of data analysis and discussion of the relevant findings. ANALYSIS OF DATA RECEIVED IN RESPECT OF THE STUDY FINDING AND DATA ANALYSIS The first researcher which involved impact of internal control measures on preventing and detecting fraud: PROFESSIONAL QUALIFICATION OF STAFF Objectives one: Verify how competent staff in charge of internal control are: In table 4.6, 25%Read MoreThe Responsibility of the External Auditor and the Management of the Entity Being Audited with Relation Fraud and Error.1575 Words   |  7 PagesAssignment number :01 Course code: HONOUDK Student number: 36894206 The responsibility of the external auditor and the management of the entity being audited with relation fraud and error. 1.Introduction Fraud is defined as something that is intended to deceive people and error is defined as something unintentionally done wrong, e.g. as a result of poor judgment or lack of care by Encarta English Dictionary. After the collapse of great companies like Enron, and World com to mention a few, itRead MoreUnderstanding Financial Statement Fraud And Financial Statements1730 Words   |  7 PagesUnderstanding Financial Statement Fraud Anna Gallagher American Public Universityâ€Æ' Understanding Financial Statement Fraud Financial statement fraud is any intentional or grossly negligent violation of generally accounting principles (GAAP) that is undisclosed and materially effects any financial statement. Fraud can take many forms, including hiding both bad and god news. Research shows that financial statement fraud us relatively more likely to occur in companies with assets of less than $100 millionRead MoreInternal Audit Function and Fraud Detection in Government Agencies. Acase Study of Naads Kumi7549 Words   |  31 PagesPerela, (2009), Internal auditing function with other intervention mechanisms like financial reporting and external audit to helps maintain cost-efficient contracting between owners and managers. It is designed by government agencies to add value and improve organizational performance. It helps organizations accomplish their objectives by bringing a systematic, disciplined approaches to evaluate and improve the effectiveness of risk management, control and governance processes.â €  Internal audit helpsRead MoreFinancial Statement Fraud And Corporate Financial Fraud1310 Words   |  6 PagesFinancial Statement Fraud Background Financial statement fraud is one of the biggest types of fraud in today’s business world. The complexity and mechanism of financial statement fraud brought the attention of auditors and regulators. Financial scandals of Enron, WorldCom, Xerox, Tyco, Parmalat, Qwest, and Satam Computers increased the auditors’ responsibility in detecting and preventing fraudulent transactions. Corporate financial fraud had negative consequences for the market capitalization dueRead MoreFraud Management : An Architectural Insight1144 Words   |  5 PagesFraud Management - An Architectural Insight Introduction Fraud is like Love. Many believe they are immune to it. Yet they make themselves available, to fall into. Successful fraud gives a new high for the fraudsters and sleepless nights for the organizations running after securing the wealth. This rush to secure the Holy Grail from reaching the fraudsters also causes a high for a broader section of the ethical technical audience who strive to ring fence their organizations. It is quite a feat to