Organizational Fraud
ORGANIZATIONAL FRAUD
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Submitted by:
Amit Goel(amigoel@gmail.com)
Mohit Goel
Executive Summary
For many organizations, “getting it right” or “getting it wrong” is a matter of survival. This study talks about the issues like, ‘organisational fraud’, ‘ethics’ & ‘empowerment’ in an organisation and their relation to standards of good behaviour in order to explore various ways in which occurrences of ever increasing frauds can be checked. Organisational Fraud can be perpetrated by those outside an organization (“third parties”), by employees, or through the collusion of employees and third parties. Numerous surveys in recent years have reported that the majority of fraudsters are employees, with more than half of these being from management grades.
With just one fraud Blue Chips turns into potato chips!!!!!
While saluting the rags to riches (and now riches to rags?) stories of organizations, we must also remember that for a Public Ltd Co., the stakeholders interests are foremost, not just shareholders. There must be more transparency between the management and employees and also the clients and the general public. Something of this sort happened with Enron and its Auditing firm "Arthur Anderson", now Accenture. They used to say ' you can teach Accountancy to an honest person but not honesty to an (dishonest) Accountant '.
"You can fool some of the people all the time; All the people for some of the time but not all the people all the time[1]" - how true!!!!!
Table of Contents
1. INTRODUCTION 7
2. OBJECTIVES OF STUDY 8
3. DEFINING FRAUD 8
3.1 Types of fraud 8
3.2 Legal Elements of Fraud 9
3.3 How big is the problem? 10
3.4 Who are the perpetrators? 10
3.5 Why do people commit organizational fraud? 11
3.5.1 Motivation 11
3.5.2 Opportunity 11
3.5.3 Rationalization 11
3.6 Red Flags of Organizational Frauds 11
3.6.1. Structural red flags 11
3.6.2. Personnel red flags 12
[pic]
Submitted by:
Amit Goel(amigoel@gmail.com)
Mohit Goel
Executive Summary
For many organizations, “getting it right” or “getting it wrong” is a matter of survival. This study talks about the issues like, ‘organisational fraud’, ‘ethics’ & ‘empowerment’ in an organisation and their relation to standards of good behaviour in order to explore various ways in which occurrences of ever increasing frauds can be checked. Organisational Fraud can be perpetrated by those outside an organization (“third parties”), by employees, or through the collusion of employees and third parties. Numerous surveys in recent years have reported that the majority of fraudsters are employees, with more than half of these being from management grades.
With just one fraud Blue Chips turns into potato chips!!!!!
While saluting the rags to riches (and now riches to rags?) stories of organizations, we must also remember that for a Public Ltd Co., the stakeholders interests are foremost, not just shareholders. There must be more transparency between the management and employees and also the clients and the general public. Something of this sort happened with Enron and its Auditing firm "Arthur Anderson", now Accenture. They used to say ' you can teach Accountancy to an honest person but not honesty to an (dishonest) Accountant '.
"You can fool some of the people all the time; All the people for some of the time but not all the people all the time[1]" - how true!!!!!
Table of Contents
1. INTRODUCTION 7
2. OBJECTIVES OF STUDY 8
3. DEFINING FRAUD 8
3.1 Types of fraud 8
3.2 Legal Elements of Fraud 9
3.3 How big is the problem? 10
3.4 Who are the perpetrators? 10
3.5 Why do people commit organizational fraud? 11
3.5.1 Motivation 11
3.5.2 Opportunity 11
3.5.3 Rationalization 11
3.6 Red Flags of Organizational Frauds 11
3.6.1. Structural red flags 11
3.6.2. Personnel red flags 12
References: Ernst & Young (2006), 9th Global Fraud Survey: “Fraud Risk in Emerging Markets” Homrigh, David et al (2006), Fraud Survey Report, KPMG. Malik, Aparna, Human Resource Manager, Adobe Systems India, Noida, contacted on April 15, 2009. Sarkar, Debashis, Human Resource Manager, HCL Tech, Noida, contacted on April 20, 2009. ----------------------- [1] Quoted by Abraham Lincoln,16th president USA, (1809 – 1865) [4] Sarbanes-Oxley Act was passed by the US Congress in 2002 (officially known as the Public Company Accounting Reform and Investor Protection Act of 2002) [5] Taken from www.Wikipedia.com accessed on April 10th 2009 [7] 1 million = 10 Lac (Lakh) [8] Adapted from the report “Fraud Survey” published by KPMG, October, 2006 [12] Source : http://www.citehr.com/ accessed on April 12th, 2009 [13] One US $ = approximately Indian Rupees (Rs.) 49.8 as on April 25th, 2009 Taken from http://www.chrmglobal.com/article_detail.php?s=28798e0684c794dba2faff4e384ab709&fromsearch accessed on April 12th, 2009