Consideration Of Fraud Within Small Business Organization

1468 words - 6 pages

Consideration of Fraud within Small Business Organizations

In recent studies made by Klynveld, Peat, Marwick and Goerdeler, LLC (KPMG), Fraud and
Misconduct survey 2010 shows “The value of frauds committed by employees has double
during the past two years with the average case now costing victims $3 million. The survey
found that 61% of cases, there was no recovery of cash stolen, and that the average time to
detect major fraud has increased from 342 days to 399 days. It also confirms the traditional
profile of the average fraudster: a 38-year old male, who has been with a business for several
years and holds a management position”.
This paper analyzes and ...view middle of the document...

During the integration, a phony
credit card number was created, that could be used by developers and programmers to test the
functionality and integration of the system. Moreover, this credit card number was fully
functional in live environments so tested and developers could ensure functionality without
being required to use actual personal or company credit card numbers. (The activity on this
card was not monitor). The integration went smoothly; however, it created thousands of
corrupt accounts that required fixing.
Key Players
* Jonathan, manager of the operations department and responsible for the resolution of all data integrity issues

* Chris, one of the top performers on the operations team with more than a year of service, quickly became a trusted and valuable team member; thus Jonathan gave him and other team members the phony credit card number in order to further increase the productivity of the team. However, Chris was making $15 per hour, the same salary at which he was hired. He was an introvert working to support a family and out himself through school.
After six months of working at plutonium, Chris received an official reprimand from the
company for using the company system to access websites containing pirated software and
music. The FBI attended the investigation and determined that Chris had not been a major
player in the piracy. Therefore Chris was quietly warned and placed on a short-term
probation. Jonathan was asked to write a warning letter for the action; however after a brief
conversation with Chris, Jonathan determined that Chris intentions were good and never
officially submitted the letter because Chris was a trusted employee and elevated the
performance of the team.
Red Flags
Jonathan noticed some changes in Chris’s behavior such as:
* Computer monitor was repositioned so that his screen was not visible to other co-workers

* New palm pilot

* New MP3 player

* New Play station

* New laptop

* New car stereo system

* Going out to lunch more frequently

* Has multiple fake user names and passwords that he frequently used for testing purposes
Fraud Triangle
Elements of the Fraud triangle, perceived pressure, perceived opportunity and rationalization
are common to every fraud. Whether the fraud is one that benefits the perpetrator directly,
such as employee fraud (case scenario), or one that benefits the perpetrator’s organization,
such as management fraud, the three elements are always present. (Page 34)
Perceived Pressure
According to the textbook, every fraud perpetrator faces some kind of perceived pressure.

Most pressures involve a financial need, although nonfinancial pressures, such as the need

to report financial results better than actual performance, frustration with work, or even a

challenge to beat the system, can also motivate the fraud.

In Chris case, person's incentive...

Other Papers Like Consideration Of Fraud Within Small Business Organization

The Roles Of A Manger Within The Fucntional Areas Of Business

745 words - 3 pages The Roles of a Manager within the Functional Areas of Business MGT/521 February 14, 2015 Professor The Roles of a Manager within the Functional Areas of Business The role of a manager is very broad and it exists across all industries ranging from larger public corporations, states governments, profit and non-profit entities, to small private businesses and within all levels of each organization. An organization is composed of 10

Health Insurance Fraud Essay

4446 words - 18 pages clearly depends on the amount of compensation. Loss Ratio of Compulsory Traffic Insurance (2007-2012) Data sources: "motor vehicle traffic accident liability compulsory insurance business bulletin"(2007-2012) The National Health Care Anti-Fraud Association estimates that 3% of the health care industry’s expenditures in the United States are due to fraudulent activities, amounting to a cost of about $51 billion. Other estimates attribute as

Kia Motor Fraud

4866 words - 20 pages their flow throughout the business process. The report further highlighted the key internal control strengths, the risk of material misstatements they serve to prevent as well as how the internal controls can be tested. The other thing that the report highlights is the control deficiencies within the business process and recommendations on internal controls that should be in placed to mitigate these deficiencies. Lastly, focus was placed on

The Fraud Triangle

978 words - 4 pages integrity of the staff determines if theft will occur. Once there is an accessibility to cash, inventory or valuable assets, employees will take advantage of the opportunity. If an organization lacks proper internal controls and duties are not properly segregated, the opportunity to misappropriate assets greatly increases (Fox School of Business 2009). Attitudes/Rationalization The attitude of top management towards financial reporting sets the

Reporting Practices And Ethics Paper

1063 words - 5 pages ). When concerning third parties, anyone who is involved with any reports must rely on information that is stated in order to be excluded from preconceived notion without a deliberation (All Business, 2010). Any organization that may deal with some kind of financial matter within their company should rely on the GAAP to allow other creditors to visualize that organizations financial statement without to hassles (All Business, 2010). Corporate ethics

White Collar Crime Theories, Laws, And Process

1628 words - 7 pages affiliates to evaluate allegations of professional (especially medical doctors, lawyers, and accountants) misconduct and are empowered to revoke licenses and the right to practice. According to (Abel 1988b; Coquillette 2005; Moore 1970) There have been the historical tendencies to assume that only professionals have the specialized knowledge needed to judge the behavior of their peers. Describe the nature of fraud, its impact on business

Europe's Enron: Royal Ahold

1062 words - 5 pages traits existing within a company can lead to catastrophic results, which is exactly what occurred with royal Ahold. 6. Testing of cash disbursements would have been a very easy account to test to see if fraud was being committed. With other aspects of an audit, the documentation that goes along with testing those accounts can be destroyed. With cash disbursements, the amount of money going in and out of the bank accounts is all the evidence

Koss Case

9786 words - 40 pages numerous extensions for the effective date of required auditor attestation. In 2010, President Obama signed legislation to permanently exempt nonaccelerated filers from auditor attestation. The case also highlights inherent risk assessments by the independent auditor when one individual holds multiple C-level titles (Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, etc.) within the organization concurrent with

Cendant Case Study

1655 words - 7 pages within the company. 2. Risk assessment is the identification, analysis, and management of risks in an organization. The auditor needs to evaluate if the company has a way of properly identifying and managing risks. 3. Control policies are the policies and procedures that help ensure management directives are carried out. They include activities such as approvals, authorizations, and segregation of duties. The auditor needs to review the

The Role Of Accounting To Business And Society

980 words - 4 pages responsibilities every day, consequently, closing that window of opportunity and allowing better supervision within an organization. Conclusion Accounting is an important discipline to all for profit or not for profit business entities and society as a whole. This comes from the fact that it allows society to make rational and ethical or sound decisions regarding its financial strength and business resources. For example, it empowers


2545 words - 11 pages within a company can lead to catastrophic results, which is exactly what occurred with royal Ahold. 6. Testing of cash disbursements would have been a very easy account to test to see if fraud was being committed. With other aspects of an audit, the documentation that goes along with testing those accounts can be destroyed. With cash disbursements, the amount of money going in and out of the bank accounts is all the evidence needed. If more or

Related Essays

Review Of Business Fraud

1651 words - 7 pages Assignment 2: Review of Business Fraud ACC 565 – Accounting Information Systems July 28, 2012 Summary of United States vs. Bo Zhang Bo Zhang, a Chinese computer program, was a contract employee assigned to the Federal Reserve Bank of New York (FRBNY), between May 2011 and August 11, 2011, to work on further developing a specific portion of the Government Wide Accounting program (GWA) source code (FBI, 2012

Start Up Decision Of Small Business

605 words - 3 pages Word Count: 480 Discuss whether readiness and restraint factors are likely to be more relevant in influencing the start-up decision of a potential small business owner more than the other characteristics Peacock (2004) is discussing. Peacock suggests that entrepreneurial characteristics formulate a high need for achievement and the inner locus of control to try something uncertain (Peacock 2004, p. 43). Liles theorizes that entrepreneurs

Manager Role Within Functional Areas Of Business

890 words - 4 pages components that make up the organization; these are usually Finance and Accounting, Research and Development, Sales and Marketing, Production, Human Resources, IT, and Distribution. The role of a manager in each of these components that make up a business is to to balance out the environmental factors while effectively performing the four functions of management within each of them which are; planning, organizing, leading and controlling. In

Business Entities: Choices As Defined Within The State Of Texas

3745 words - 15 pages ’ taxation procedure. The tax liability one is responsible for depends greatly upon the election of a particular entity whether it is a Limited Liability Partnership, Limited Partnership, Limited Liability Company, S corporation, C Corporation, or a Business Trust. Within each of the different organized entities federal law has provided each organization with separate and distinct procedures in accounting for its assets in relation to its tax