occupational fraud and abuse on the company Essay

971 Words Apr 7th, 2014 4 Pages
The effect of occupational fraud and abuse on the company
Occupational fraud and abuse is defined as “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (2012 Report To Nations On Occupation Fraud And Abuse, 2012). Occupational fraud entails deceiving employing organization to obtain resources or assets for personal gain and abuse involves misapplication of the resources provided by the employer. Occupational fraud is typically for three types:
1. Corruption
2. Asset Misappropriation
3. Fraudulent Statement.

Amount these three categories, asset misappropriation, and corruption are the most common types of fraud and abuse. In 2012
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Additionally, SEC’s Division of Enforcement is responsible to bring civil cases and penalties against the companies that attempts to conduct fraud or violets the security acts.
Because of this oversight by SEC and government, companies are providing detail disclosures, more transparent financial statements to the investors and users of financial statements.

Potential corruption schemes to be aware of in the company
Corruption means misusing the entrusted power or authority against the official duty to obtain benefits. Corruption schemes can be broken down into four categories:
1. Bribery- This entails offering, giving, and receiving anything of value to influence the decision. Official bribery involves providing or offering anything of value to influence the decision of government agent or employee. Commercial bribery deals with providing something of value to influence a business decision rather than decision of government employee or agent. Generally, there are two types of schemes involve in bribery:
• Kickback Schemes: These schemes are possible because of collusion between employee of the victim company and outside party, typically vendors. In this, vendor submits either inflation or fraudulent invoices to the victim company, and the employee in the victim company makes sure that the payment is made on those invoices. After the payment, employee gets his or her share of payment that is known as kickback. In…

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