Essay about Media Violence

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Fraud Detection and Forensic Accounting
¨ Fatma Ulucan Ozkul and Ayse Pamukcu ¸ ¸



Definitions of Fraud

A quick search for the meaning of fraud in the dictionary states that fraud is “deceit, impersonation with intent to deceive, criminal deception done with the intention of gaining an advantage.” The Institute of Turkish History explains the word fraud as “a deceptive trick, scam, game, artifice, cabal which is committed to cheat, mislead someone” and “contributing something useless to something in order to gain advantage” (Institute of Turkish History 1998, p 995). According to another definition, fraud is “to create a misjudgment or maintain an existing misjudgment to induce somebody to make a contract” (Arzova 2003, p 118). Another definition says “it is to enrich oneself by intentionally reducing the value/worth of an asset in secret.” Fault is another term encountered when studying the concept of fraud. Fault is defined in the dictionary as “wrong, mistake, error,” “wrong, mistake, error committed involuntarily and unconsciously.” Fault stems from the deficiencies originated from the person or environment. Intention is the most important element which distinguishes fraud from fault. Moreover, the person committing fraud has an objective of moral or material gain. Debugging frauds, which are heavily committed on documents, from faults and bringing them to light is a difficult but not impossible task. Experienced auditors could detect frauds, thanks to their knowledge and experience. Fraudsters definitely leave traces, and experienced auditors could find the fraud and the fraudster by tracking traces (Arzova 2003, p 119).

¨ F.U. Ozkul Vocational College, Bahcesehir University, ˙stanbul, Turkey ¸ ¸ I e-mail: A. Pamukcu ¸ Faculty of Business Administration and Economics, Marmara University, Istanbul, Turkey e-mail: K. Calıyurt and S.O. Idowu (eds.), Emerging Fraud, ¸ DOI 10.1007/978-3-642-20826-3_2, # Springer-Verlag Berlin Heidelberg 2012 19


¨ F.U. Ozkul and A. Pamukcu ¸


Types of Fraud

There are two types of fraud committed in business (Bozkurt 2003, p 2): • Personal use of business resources • Drawing up financial statements of the business falsely Examples of frauds that employees commit to benefit themselves are given as follows (Bozkurt 2003, p 2): • Embezzlement of the money during its collection but before it is recorded in accounts • Stealing the cheques of business • Tampering the bank records and taking monetary advantage • Gaining advantage through forgery of documents • Making payments which should not be made or previously made • Creating fictitious debts and having payments done in favor of oneself • Giving discount improperly or without authority • Creating ghost suppliers and having payments made in their favor • Inventory and scrap theft • Office supplies and fixed asset theft • Creating fictitious expenses and obtaining disbursements • Padding expense items • Benefiting from placing redundant order • Creating ghost employees and embezzling their wages/salaries • Accepting bribes from the customers and suppliers of the business with various reasons • Using credit cards of the business for personal objectives • Benefiting from overstated personal expenditures • Manipulating the overtime periods and obtaining extra payment • Benefiting from padded travel expenses • Selling business assets under the market value Objectives of financial statements fraud: • Increasing the market value of the business • Making financial statements consistent with budgets • Obtaining unfair earnings by presenting falsely the value of the business


Statistics on Committed Frauds

Statistical information given below will give you an idea about the size of fraud: • It is estimated that employee frauds cost businesses $400 billion per year in the USA (Bozkurt 2003, p 1). • Studies conducted in developed countries reveal that businesses lose 6% of…