Defrauding an Organization

Introduction

Research has shown that most organizations end up losing much money or suffer a distorted goodwill because of the scrupulous nature of its staff. Defraud is described as to deprive someone or an organization by deception in order to get money or rather to use fraud in order to get money from an individual or an organization.  Fraud can be committed both internally and externally in an organization by its staff, customers, vendors and other parties. Internal fraud is one that comes from within an organization by an employee while external fraud is one that is done by outsiders since the perpetrators are not employees, managers, and owner of the victim organization (Murphy & Dacin, 2011). Therefore, I can defraud my organization in various ways such as removing cash from the organization before it reaches the accounting system. The paper will address how I can defraud my organization while working inside and also identify and exploit weaknesses particularly in the organization.

As an employee in an organization, I can defraud through various means such as asset misappropriation schemes like cash schemes, fixed asset schemes and also through financial statements fraud. The financial statement fraud is falsifying a balance sheets, income statements and also cash flow statement in order to fool the individuals who read them. Therefore, as an employee, I can falsify a financial receipt, especially when recording travel expenses made on behalf of the organization. So, I can possibly come up with an amount which I did not spend on the expense just to acquire more from the Company. For example, if I used $200 as a transport expense on behalf of the Company, I can decide to create a receipt reading $400. Therefore, I will be able to gain more than $200 for making such as transaction (Murphy & Dacin, 2011).

I can also use skimming of cash and cash larceny technique to defraud my organization. It is a type of asset misappropriation consists of taking cash prior to entering an organization’s accounting system. This scheme is very difficult to uncover since it requires finding evidence of an aspect that has not been recorded yet and does not need a lot of sophistication to analyze making it a common choice among the once that commit fraud. Tampering with a check accounts receivable skimming, and also payroll schemes are also known as fraud. Therefore, as a worker, I can collide with some of the staff and carry out theft of the incoming checks. Cash Larceny is known as intentional theft of employer’s cash without the consent and also contrary to the will of the employer. This technique involves taking money that has already appeared on an organization’s financial books thus the name book fraud.

Based on Cash Larceny, I can practice the lapping scheme on the organization especially when working as an accountant. Lapping scheme is a fraudulent operation that involves modifying accounts receivable to hide a stolen receivable payment. This involves recording a current payment of goods or services from the customers as previous in order to pocket the money. I will be able to receive some of the money paid by the customers by forwarding the account information as not paid. The organization will not be able to identify the scheme easily unless an extensive research is done by the management. The scheme can take place for a long period of time without notice.

Cheque interference is another method that I can use to fraudulently gain where I have not sown. This is by placing false information on the cheque, forging a signature purposefully to alter the amount written on the cheque to illegally gather extra coins. The act can be made easier by identifying and carefully exploiting the weak points in an organization`s cheque writing processes. Research has shown that a cheque is one of the most used avenues for fraud based on its features. Therefore, because of the reasons, I can give a vendor a check and then fail to reflect it on the overall accounting. It is imperative that most of the statement made by cheque can face issues which the managers may not understand. Moreover, if a client paid using cheque it is possible to claim that the cheque failed if the customer information was not recorded. I can easily pocket the money unless an extensive auditing is done.

Consequently, I can also use register disbursement schemes. The aspects such as refunds and voided sales are operations processed at the register when a client returns an item that was purchased from the store. The operations entered on the register database shows the merchandise is being replaced in the store’s inventory and a purchase price is being returned to the customers. Moreover, voids and refunds indicate that a disbursement of money from the register as the clients receive his money back. This scheme represents a class of occupational fraud that is a hybrid between cash theft and fraudulent disbursements. Thus, as an employee, I can physically remove some cash from the cash register and get away with it. This approach is perhaps similar to cash larceny schemes.

Organization’s Weaknesses for Fraud

Documentation

The existing of a fraud within the organization is an indication of some weaknesses and needs to be solved. Therefore, when an organization doesn’t have a proper controls financial management, one may not know the true financial situation of an organization. One major weakness in the financial management is the lack of adequate documentation. A proper documentation and management will enable the managers of an organization to analyze and recognize any possible fraud (Albrecht, et al, 2011).

Function Segregation

Important operations such as giving checks have to be segregated through various tasks performed by different staffs. Therefore, having the same staff handling the entire process opens a window for fraud as a result of the internal financial controls (Albrecht, et al, 2011). It is known that when an individual issues a check, two or more people sign it while another sends it into the books. The organization had one employee handling a line such as financial operations. This allowed for gaps to conduct a fraud scheme.

Excess Authorization

The organization ignored to track approvals to ensure that the staffs are exceeding their levels. This was a key internal control weakness. It is imperative that in the organization, an employee has the authorization to sign for some roles and spend limits for approving the expenditure. For example, an employee is able to face a transport fee for a trip that was made on behalf of the organization. The organization was not able to track to find out whether the employee was telling the truth or not (Albrecht, et al, 2011). The organization had too much of trust on the employees.

References

Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2011). Fraud examination. Cengage Learning.

Murphy, P. R., & Dacin, M. T. (2011). Psychological pathways to fraud: Understanding and preventing fraud in organizations. Journal of business ethics, 101(4), 601-618.

Leave a Reply