Report to the Nations on Occupational Fraud and Abuse Paper Example

Paper Type:  Essay
Pages:  3
Wordcount:  604 Words
Date:  2022-11-20


The principal reason behind independent auditing is providing creditors and investors with unwavering confidence in the financial and security markets. Over recent years, cases of occupational fraud and abuses are exceptional and unusual. Occupational fraud is defined as the use of an individual or personal occupation for the benefits of personal enrichment via misapplication or deliberate misuse of the organizational assets or resources. This paper focuses on issues on financial fraud in the US versus the rest of the globe by looking on various economic aspects such as compensation structure and capitalistic structure. In furtherance, the paper also looks at different approaches to mitigating the number of occupational frauds in the capital markets.

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Executive compensation structure in the United States

It is unquestionable that the approaching used for providing globally payments are continuing to become more uniform. The US employs pay-for-performance that many countries are using in the compensation structure. The structure is characterized by long-term incentive, substantial annual incentive, and limited salary. The recent financial crisis in the US can be used for tracing the evolution of executive compensation, its resulting regulations, and its controversies. Previous studies by Anon (2019) postulates that the traits regarding the current executive compensation exercises are reflecting the often unintended consequences about regulatory responses to viewed abuses experienced in top-executive pay.

Studies by Smart Business Magazine (2019)reveals that compensation contracts experienced in the United States have significantly shifted from the accounting earnings to the stock prices making them the fundamental performance measures. Anon (2019) mentions that the motives behind the shift tend to be unclear. However, it could be a response to the arguments suggesting that stock prices play the role of measuring the shareholder equity in a way that is directly making a better alignment of both shareholder and managerial. However, looking at the earning-based contracts, it is evident that these contracts are creating incentives that are manipulating earnings,

Mitigating the Amount of Occupational Fraud

Previous studies by Smart Business Magazine (2019) postulates that occupational fraud is a costly and pervasive problem facing the United States and the rest of the world. For instance. Report by the (The Risk Management Blog | Lowers & Associates, 2019) discloses that a typical company tends to lose approximately 5% of its annual revenues due to fraudulent incidents with a median fraud estimated as eight months before it is detected. For this reason, it is substantial to come up with practical approaches for mitigating fraudulent incidents in occupational compensation.

Establishing internal control is the prevalent critical measure of occupational fraud. For instance, the report by (Anon, 2019) discloses that failure to have internal control in the management facilitated to the scam of asset misappropriation. For this reason, companies and other firms in the United States as well as in the rest of the world should use internal controls to detect fraudulent activities.

Another solid mitigation strategy against occupational fraud is implementing a third-party hotline. The hotline plays the role of ensuring that all suspicious activities are disclosed without reprisal (The Risk Management Blog | Lowers & Associates, 2019). In light of this, the management should ensure that all the staff members are aware of the existence of the hotline and teaching them various ways of accessing it.

Works Cited

Anon, (2019). [online] Available at:[Accessed 28 Jan. 2019].

Smart Business Magazine. (2019). Oversight is needed to mitigate occupational fraud - Smart Business Magazine. [online] Available at:[Accessed 28 Jan. 2019].

The Risk Management Blog | Lowers & Associates. (2019). Lessons in Occupational Fraud and Fraud Prevention. [online] Available at:[Accessed 28 Jan. 2019].

Cite this page

Report to the Nations on Occupational Fraud and Abuse Paper Example. (2022, Nov 20). Retrieved from

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