Topics: Fraud, Identity theft, Credit card fraud Pages: 8 (2370 words) Published: December 2, 2012
Business Fraud


WE will attempt to display and define several types of fraud, why employees commit fraud and how they go about. We will discuss what effects fraud has upon the company, the employees and society. We will also look at what the employee can do to aid in reducing fraud. Some preventions will be given along with ways to discover fraud.

Identity theft; The illegal use of an individuals personnel identity by another person for financial or material gain. Check fraud; when an employee issues a check without authorization. Embezzlement; stealing money directly from the business, this fraud is usually committed electronicly. Employee fraud; this type of fraud consists of employees taking items from inventory without permission nor payment. Credit Card fraud; this is the theft of or fraudulent use of a company credit cards. Electronic fraud; this a relatively new type of fraud. Using electronic fraud you can manipulate databases to say what you want them to. You can move any amount of money or goods around, you transfer a $100.00 to a million dollars or a warehouse in just seconds. Electronic fraud is fast becoming the preferred method of committing fraud. Asset Misappropriation; this is the most common type of fraud. It is the most common type of fraud but the last expensive. This fraud includes; check forgery, direct theft of money, payroll fraud, where employees bill the company for hours not worked or trips not taken or padding the expense account, inventory fraud is when the employees take items from inventory for their personnel use or for resale without permission or the thefts of services, pest control, lawn, termite control, plumbing repairs on their homes or someone else, or charging less then the stated rate and pocketing the money. Causes of fraud

In 1950 a criminologist named, Donald Cressey started researching “why people commit fraud.” His research came to also be about “why people a trust.” He concluded that there were three reasons why people would violate a trust and he named it the fraud triangle, Pressure, opportunity and rationalization.

Fraud Triangle (Wells J., 2005, Principles of Fraud )
Pressure; (non-shareable financial pressure)
Inability to adequately financially pay ones obligations. Drugs or gambling addiction
Pressure to meet ones quota or set goals at work Need to meet earnings projections to sustain confidence by superiors. Desire for status symbols, big house, expensive car, private schools, etc. Maintaining a certain life style. Opportunity,

This fraudster waits until they feel it is the best time to to commit their crime. They are in a position where they can take advantage of the company and benefit themselves. They are in a position to manipulate controls so as, they believe, not to get caught. Opportunity could also lie with lax management or absent management. Rationalization;

The individual committing the fraud has to convince themselves that they are not doing something wrong and what they are doing is the right thing to do under the circumstances. A few of the rationalizations are:

I am only borrowing the money and I will pay it back. I am entitled to these goods or this money.
I had to do it for my family, I had to provide for them. I was grossly underpaid and my boss cheated me. For those who the Fraud Triangle refers to are not deterred by...
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