Corporate Crime in APA Style Term Paper

Pages: 10 (4145 words)  ·  Bibliography Sources: ≈ 25  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT . . .
The method of 'cooking the books' was what these corporations used, wherein the company was actually victimized within its own four walls, by the actions of certain loyal and trustworthy workers and employees who saw it fit to cheat and steal form the company that had employed them so trustingly.

Learning how to detect such fraudulent deeds and how these deeds affect the accounting books of a firm would help in the detection and the penalization of the executives and managers and various other employees of the corporation. The 'Black's Law Directory' states that fraud essentially constitutes all those nefarious and devious activities that a human brain can devise in order to obtain a good advantage over the others in the same firm or elsewhere, so that he may be bale to enjoy the fruits of his illegal behavior. The perpetrator can achieve this by using any of the means of suppressing the truth, or by offering false suggestions and ideas to his colleagues and peers. Fraud also includes all the unfair and cunning methods that he may use, like trickery, theft, and the element of surprise, to cheat another person and gain unfair advantage over them. In an occupational setting, like for example, within a corporation, a fraud is the various methods and means by which the very organization is actually victimized by the fraudulent individual who works within its four walls, and cheats and commits other frauds. (The Institute of Internal auditors Research Foundation)Buy full Download Microsoft Word File paper
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Term Paper on Corporate Crime in APA Style Assignment

The three principles that are generally used by this fraudulent person are: asset misappropriations, issuing fraudulent statements, and corruption. Whatever be the method, however, the result is still the same: the numbers that are generated by the frauds cannot match or equal the numbers that are generated by the accounting machines within the corporation that are based on an unfailing system of logic and mathematics. For example, when the perpetrator adds falsified sales accounts to the supposed revenues of the company, when the time comes for the company to check the cash derived out of these profits, it will show a serious imbalance; the sum will be out of kilter with the sum shown by the falsified accounts of the cheater. If, for example, the cheater were to take bribes or steal merchandize, or embezzle money from within the company, then when the accounts are checked, there will be a definite imbalance in the expenses shown.

These are all the clues that the management or the auditors must use in order to anticipate or apprehend a criminal who perpetrates an accounting fraud. The crux of the problem is this: it is indeed very difficult for the auditor to detect these crimes and point a finger at a particular person after the detection has been carried out successfully. Why should it be so? It is because it is very difficult for the detective to detect the less than unique crime; the fraud is so very commonplace that it will be a time consuming process to detect it. Another reason is that the lower profits or higher expenses that are revealed in the auditing books may actually be due to legitimate causes; it may be due to a temporary loss in production, market downturns, or due to inefficiency on the part of a few employees, or any other reason. This makes it difficult to even know that a crime has actually been committed. (The Institute of Internal auditors Research Foundation)

Therefore, the accountant or the detective may not know if he has been faced with the details of a crime that has been perpetrated, or if the losses or extra expenses that are shown in the books are real. Another reason for the lack of the detection of crimes being committed in the accounts of corporations is that it is basic human nature to trust a person, and believe that he will not be able to commit any crime or do any harm to the company that has employed him. Therefore, any clue that virtually stares at him in the face would be easily explained away, and the fraud would be left uncovered and undetected. Most auditors often lose their skepticism when they are faced with a person that they know well, and this leads them to take everything at face value, and the cheater is left scot-free and undiscovered. It is even stated that such auditors are not actually doing their best at their jobs; when the truth is looking at them directly, they must be able to recognize it for what it is, rather than believing that this particular fraud will not happen, and it will not be committed by this particular individual.

Certain auditors have even been accused of not making full use of all the various analytical tools that are available to them today. It is true that in the past, auditing was an extremely time consuming job, and crime detection was virtually impossible. But today, when there are a great many options for the auditor to choose from, the entire process is less tedious, and there are plenty of software packages that would help the auditor in detecting the various clues that signal a fraud, and he can use these tools to the best of his advantage. Not only would the company fare better, but the auditor's job would also be easier and more efficient. The 'anti-fraud' weapon that has been created by Richard B. Lanza, entitled ' Proactively Detecting Occupational Fraud Using Computer Audit Reports' not only details the analytical tools that an auditor must use during the course of carrying out his duty, but also details the various kinds of specific audit tests that he can utilize for the apprehension of more than 15 fraudulent accounting crimes in large corporations. The various fraudulent schemes are explained, and the auditor would find the details to be of immense benefit to him while auditing a firm's accounts. (The Institute of Internal auditors Research Foundation)

All the material has been obtained from the uniform occupational fraud classification system that is followed by the ACFE. Though it is true that there is no foolproof way in which accounting frauds can be detected with great accuracy, and no amount of computer analysis and other methods would be able to satisfactorily provide the auditor with a sufficient number of clues with which he would be able to detect a fraud with ease and speed, there is eventually no guarantee that the crime would in fact be detected on time, or even at any time at all. This may be because of the very nature of the business where trust and faith between the various parties is of paramount importance, and both business and fraud depend on this trust for the continuance of the business. It is the auditors' primary responsibility to see to it that they must be able to train themselves in a manner that would enable them to detect such crimes, whether with the analytical tools that are at their disposal, or with any other methods available to them today, and enable the management to apprehend the criminal before it is too late. (The Institute of Internal auditors Research Foundation)

There are a few people who believe that there is an intangible link between the compensation of an executive and the accounting frauds that are committed within the corporation. Research is being conducted on this issue, and it is a debatable question whether the compensation and the frauds committed have any sort of inter-relationship. A study conducted by the 'Securities and Exchange Commission' on about 46 firms that had been accused of having committed accounting frauds by the Commission details that there is a link between the executive compensation and the accounting frauds. The study revealed that the accounting frauds were on a definite increase, and the increase is in direct co-relation to the stock-based compensation given to the executives of the corporation. Some of the largest accounting frauds in history, states the study, have been committed in recent history. These crimes had in fact resulted in a wave of legislative as well as regulatory changes in the industry. The auditors and the management and academics and legislators alike researched the causes for these crimes, and there were no easy answers to the question.

However, the solution provided within the well-researched study is that an innate understanding of all the various underlying causes behind the perpetration of the crimes must be undertaken with immediate effect so that such crimes can be prevented in the future. There are some who suggest that the prospect of personal gains of the executives of the corporation was what in fact led to this spate in accounting frauds, and this is true to a certain extent. The managers and executives of the company are generally offered stock-based incentives, as a part of their compensation, a type of compensation that saw a meteoric rise in the early years of… [END OF PREVIEW] . . . READ MORE

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