Procedures in Collecting Forensic Evidence
Procedures in Collecting Forensic Evidence Organizational fraud and abuse account for five percent of a company’s gross revenues. The effect of occupational fraud and abuse on a company is an increase in costs, a reduction in potential raises, and a reduction in profits. Occupational fraud is categorized as asset misappropriations, fraudulent statements, and corruption. Corruption includes change from positive morals and principles to bad. The potential corruption schemes a company should be aware of are bribery, illegal gratuities, economic extortion, and conflicts of interest. Bribery is an offering to have an act completed. Kickbacks is an example of a bribery scheme. To solicit business, a vendor may win a contract by paying the contracted company employee to enter into a business relationship. The relationship between the employee and vendor usually already have a collusive relationship. “ As with any form of billing fraud, kickback schemes have the potential to create budget overruns, either because of overcharges or excessive quantities purchased, or both. Actual expenditures should be compared to budgeted amounts and to prior years, with follow-up for significant deviations” (Wells, 2011, 246).
Illegal gratuities are used to influence decisions like bribery. Examples of this type of corruption are accepting large gifts in exchange for business deals. Economic extortion is much like a bribery scheme but instead of a vendor bribing an employee; the employee is bribing the vendor. Conflicts of interest “occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company” (Wells, 2011, 255).
Along with corruption schemes, fraud can lead to negative effects on a company. Fraud can occur through creative accounting. Creative accounting practices are through big bath charges, creative acquisition accounting, cookie jar reserves, materiality, errors, and revenue
Illegal gratuities are used to influence decisions like bribery. Examples of this type of corruption are accepting large gifts in exchange for business deals. Economic extortion is much like a bribery scheme but instead of a vendor bribing an employee; the employee is bribing the vendor. Conflicts of interest “occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company” (Wells, 2011, 255).
Along with corruption schemes, fraud can lead to negative effects on a company. Fraud can occur through creative accounting. Creative accounting practices are through big bath charges, creative acquisition accounting, cookie jar reserves, materiality, errors, and revenue
References: Singleton, T.W., & Singleton, A.J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). Retrieved from The University of Phoenix eBook Collection. Wells, J.T. (2011). Principles of Fraud Examination (3rd ed.). Retrieved from The University of Phoenix eBook Collection.