Corporate Fraud and Internal Control, + Software Demo: A Framework for Prevention

Language: English

Pages: 388

ISBN: 1118301560

Format: PDF / Kindle (mobi) / ePub


Essential guidance for companies to examine and improve their fraud programs

Corporate governance legislation has become increasingly concerned with the ongoing resilience of organizations and, particularly, with their ability to resist corporate fraud from the lowest levels to the upper echelons of executive management. It has become unacceptable for those responsible for corporate governance to claim, "I didn't know." Corporate Fraud and Internal Control focuses on the appropriateness of the design of the system of internal controls in fraud risk mitigation, as well as the mechanisms to ensure effective implementation and monitoring on an ongoing basis.

  • Applicable for a wide variety of environments, including governmental, financial, manufacturing and e-business sectors
  • Includes case studies from the United States, Europe, and Africa
  • Follows the standards laid down by the Association of Certified Fraud Examiners, the internationally recognized body governing this activity
  • Accompanying interrogation software demo (software demo is not included as part of this book's e-book file, but is available for download after purchase)

Written by a fraud prevention leader, Corporate Fraud and Internal Control addresses the concerns of both management and audit in ensuring a demonstrable level of activity to ensure sustainability of the organization and minimization of the impacts of fraud, upon early detection.

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transactions by direct manipulation of the data contained in database. In order to ensure that only legitimate users can access the data, controls are implemented at the mainframe level to keep unauthorized outsiders out and insiders where they are supposed to be. Within the mainframe, the organization’s application systems carry out the business functions as programmed, and built into them are the business controls such as segregation of duties, reconciliations, user authentication, and the

performance of, or failure to perform, his/her duties.”2 Such bribery may include soliciting the commission of any other type of fraud or the influencing of an official to carry out any act that violates the lawful duty of that official. Under such circumstances, bribery is defrauding the employer of that official of the right to honest and loyal services by an employee. Such bribery may include giving, receiving, offering, or soliciting of a “thing of value” because of an official act that has

impact on individual industries is explored more thoroughly in Chapter 12. In addition to direct losses, fraud may be seen as part of the economic externalities. An economic externality occurs when one business implements actions, or refrains from taking action, and in doing so passes on costs to another business. For example, where an employee is dismissed for fraud-related offenses but no prosecution takes place, the ex-employee is free to seek employment with another organization and repeat

mechanisms in place; 66 percent had internal audit or fraud examination departments, 70 percent had a formal code of conduct in place, and more than 75 percent had external audits carried out on the financial statements. The low effectiveness of these controls in detecting fraud events does not, however, indicate their lack of effectiveness in preventing fraud. In smaller organizations (typically fewer than 100 employees) with fewer resources applied to antifraud internal control structures,

controls and should be in place in all organizations. Lack of such controls or their ineffective implementation can be a major temptation to fraud and should be a red flag to management. Procurement Red Flags Depending on the nature of the organization, procurement may be one of the most significant areas of opportunity for fraud. Abnormalities within the vendor arena could include alerts such as: Vendors not present on an approved vendor list Excessive use of sole-source vendors Vendors with

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