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A fraud risk is the likelihood that fraud will occur or has occurred within a given organization. On the other hand, fraud risk factors are conditions or events that indicate pressure or incentive to carry out fraud, rationalization and attitudes to justify the fraudulent activities and opportunities to perpetuate fraudulent action. These factors are present in a situation where the fraud has occurred but they do not necessarily indicate the presence of fraud. Some of the fraud risk factors include the nature of the control environment (e.g. separation of duties in different phases of a transaction and poor documentation), nature of items (e.g. ease of reseal and size and value) and pressures (e.g. expectation and level of satisfaction) (Albrecht et al, 2008).
The element of FCPA violations and claim is a factor that must be fulfilled in order for an individual or party to be held liable for paying bribe to a foreign government official or a political figure in order to obtain business favour. Seven elements make the anti-bribery provisions of the FCPA. These elements include, in order for the violation to occur the act must be carried out by the person whom meet different jurisdiction requirements, be done in furtherance of promise to pay, offer, payment or authorization to pay, it can be of any value and carried out either directly or indirectly. It must also be carried out corruptly to the foreign or government official for inducing unlawful act (Huskins, 2008).
Fraud scheme is an intentional and deliberate plot to obtain benefit from a business or a party by fraudulent representation or material omission. Fraudscheme is usually carried out by different people who are held accountable for a given transaction or who are in control of a certain economic resources of an entity (Albrecht et al, 2008). The fraud scheme is fuelled by the fraud risks factors. The fraud risk factors creates an environment through which given individuals can carry out fraudulent activities either due to their total autonomy or weak internal control system
Forensic accountants are mainly involved in the investigation of the financial statements in order to find out whether the fraud has occurred or to gather evidence that they will submit in the court of law. Forensic accountants are more suited to FCPA claims investigations before they can be able to use their evidence, as experts in the court of law should a fraud be detected (Albrecht et al, 2008). The challenges involved in pursuing bribery actions involve high influence of the people involved in their organizations, investigating high-ranking politicians who might pose personal threat and bribery.
To the auditors, fraud is viewed as the material and intentional misstatement in the financialstatements, which are subjected to the audit. The material misstatement may be omission, deletion, inflating, or deflating of the value. In the eyes of the lawyer, fraud is a criminal act that involves carrying pout activities that are not in line with the law of the land. The forensic accountant view fraud as an action taken by an individual or a party that is aimed at obtaining benefit through illegal ways.
Ponzi scheme was propagated by paying the investors with returns that were obtained from the new capital that was paid to the company by its new investors. In Bernie Madoff scheme, the business unit of was been operated in a Ponzi way. The two schemes involved luring new investors with high returns that was obtained from the new capital as opposed to company returns (Huskins, 2008). The main difference between the two schemes was that in Ponzi scheme, the entire business was involved in the scandal while in Bernie Madoff scheme only the business unit was involved.
Albrecht, W., Albrecht, C., Albrecht, C., &Zimbelman, M. (2008). Fraud examination. Cengage Learning.
Huskins, P. C. (2008). FCPA Prosecutions: Liability Trend to Watch. Stanford Law Review, 1447-1457.
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