occupational fraud and abuse on the company
The effect of occupational fraud and abuse on the company
Occupational fraud and abuse is defined as “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (2012 Report To Nations On Occupation Fraud And Abuse, 2012). Occupational fraud entails deceiving employing organization to obtain resources or assets for personal gain and abuse involves misapplication of the resources provided by the employer. Occupational fraud is typically for three types:
1. Corruption
2. Asset Misappropriation
3. Fraudulent Statement.
Amount these three categories, asset misappropriation, and corruption are the most common types of fraud and abuse. In 2012 total number of median loss of occupational fraud and abuses of all the reported cases was $140,000, and one-fifth of the cases involved losses of least $1 million (2012 Report To Nations On Occupation Fraud And Abuse, 2012).
On an average United States organizations incurred 6% of revenue loss every year due to occupational fraud and abuse (Scott, A, 2002). Victim organizations not only bear the revenue loss but these types of frauds can also damage its goodwill in the community as well.
Large organizations with multimillion turnovers can bear these losses but can have a devastating effect on small organizations.
U.S. governmental oversight of accounting fraud and abuse and its effect on the company
In the past many companies used the flexibly in accounting framework to modify its financial statements to present the perfect picture to the investors. Security and Exchange Commission (SEC) finally than introduced some detailed changes in the accounting framework. In addition, it introduced processes to enhance outside auditing, made recommendation to strengthen the audit committee, and encouraged cultural change.
SEC’s Division of Corporate Finance is responsible to review critically the financial statements of the
Occupational fraud and abuse is defined as “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (2012 Report To Nations On Occupation Fraud And Abuse, 2012). Occupational fraud entails deceiving employing organization to obtain resources or assets for personal gain and abuse involves misapplication of the resources provided by the employer. Occupational fraud is typically for three types:
1. Corruption
2. Asset Misappropriation
3. Fraudulent Statement.
Amount these three categories, asset misappropriation, and corruption are the most common types of fraud and abuse. In 2012 total number of median loss of occupational fraud and abuses of all the reported cases was $140,000, and one-fifth of the cases involved losses of least $1 million (2012 Report To Nations On Occupation Fraud And Abuse, 2012).
On an average United States organizations incurred 6% of revenue loss every year due to occupational fraud and abuse (Scott, A, 2002). Victim organizations not only bear the revenue loss but these types of frauds can also damage its goodwill in the community as well.
Large organizations with multimillion turnovers can bear these losses but can have a devastating effect on small organizations.
U.S. governmental oversight of accounting fraud and abuse and its effect on the company
In the past many companies used the flexibly in accounting framework to modify its financial statements to present the perfect picture to the investors. Security and Exchange Commission (SEC) finally than introduced some detailed changes in the accounting framework. In addition, it introduced processes to enhance outside auditing, made recommendation to strengthen the audit committee, and encouraged cultural change.
SEC’s Division of Corporate Finance is responsible to review critically the financial statements of the