Fraud is a broad concept that covers many issues. “Fraud is any and all means a person uses to gain an unfair advantage over another person” (Romney & Steinbart, 2006, p.146). In light of some of the risks listed above, fraud may seem like a minor issue that only concerns the largest businesses, but this is not the case. According to one organization:
Here are some shocking statistics:
• $652 billion in revenues are lost annually to fraud, or 5% of total revenues
• The average fraud scheme lasted 18 months before it was detected
• Organizations lose 20% of every dollar earned to some type of workplace fraud
• Fraud reduces net income dollar for dollar, meaning that if the profit margin is 10%, an additional $100,000 of revenue would have to be generated to cover a $10,000 fraud (Upcoming Events , 2006)
There are two categories of internal fraud, misappropriation of assets and fraudulent financial reporting. Each of these issues requires different but equally important internal controls to ensure they do not occur. This is where a company’s accounting information system (AIS) plays a large roll. Along with the many other aspects of an AIS, internal control is crucial to that company’s success. Lastly, companies either hire or contract out auditors, who have the job of detecting and reporting these instances of fraud both for the company itself as well as for... [continues]
Cite This Essay
(2008, 04). Internal Fraud. StudyMode.com. Retrieved 04, 2008, from http://www.studymode.com/essays/Internal-Fraud-138956.html
"Internal Fraud" StudyMode.com. 04 2008. 04 2008 <http://www.studymode.com/essays/Internal-Fraud-138956.html>.
"Internal Fraud." StudyMode.com. 04, 2008. Accessed 04, 2008. http://www.studymode.com/essays/Internal-Fraud-138956.html.