Research Paper on Fraud Forensic: Gaining Financial & Asset Gain Through Analysis & Interviews

Introduction

As an act of trickery to get financial and asset gain from an organization or to an organization, fraud forensic assist in analysis of the act thus giving result and conclusion. The steps involves gathering information through interviews, finance statements and even receipts (Appelbaum et al, 2018). Through all these source an auditor analysis and give report of the finding thus developing conclusion and recommendation. Through interviews and analyzing deliverable section. The company took action after receiving call from client and auditing was required. The external auditors perform a forensic analysis based on the data collection. This report will give the findings. As a fraud specialist am to perform analysis, report the findings and recommend on the prevention of fraud.

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Cases of Fraud

Employee embezzlement is fraud that is commonly associated with sales where and employee trickery to possess the company assets. A direct case the employee becomes the first hand beneficiary of the fraud from the cash and supply he gets away with. In an indirect situation employee involves customers that he receives kickbacks for bypassing sales and high price. On the other hand, the management team can be involve in fraud by altering the financial statement to make a false picture of company performance. With these the top management can use it for bonuses justification and to protect their position.

Fraud Perpetration

This is led by developing an argument that there must be a reason behind people's actions in life. The question developed is what led an individual to commit fraud based on the background information, lifestyle, and even sudden happening that might require fund backfill to return to normality. Some suspicious reaction and action driven due to circumstances that leads an individual that is conservative with work ethics is swallowed by impunity of fraud. The fraud triangle theory describes the related factors (Cao et al, 2015). The peak of the triangle is pressure to commit fraud while the bottom use which are opportunity and rationalization.

Perceived Pressure

Pressure on an employee can be financial or non-financial leading to unethical behaviors. The most common types of pressure are personal, employment stress, and external pressure. On the other hand perceived pressure is motivated by lifestyle such as the greed, living extravagantly, personal debt, family financial problem, drug addiction and gambling.

According to Lister (2007), define pressure as "the source of heat for the fire," thus this pressure does not justify an individual to commit the act (Manso, 2015). In cases where an individual has that superego that they always success in their position thus do not want to damage their reputation due to the political and social pressure.

Position Achievement Cases

Michael: due to a non- compete agreement with his former employer he did not want his reputation thus developing pressure which might have lead him to adjust sales to maintain his position as a sales rep.

Carol: Her reputation as a clerk then promotion to accountant thus she had that pressure to deliver the same way as a previous position, thus confirming classification of the sales to improve the sales.

Larry: As he was promoted to contract manager he did not want to fail after 10 years of experience in the company and thus political pressure developed.

Billy: Because of his experience and always meeting his quotas, he might never want to show that he can fail meeting it.

Personal or family problem

Billy: His history show that he goes through second divorce

Amy: Required to three children and she is already divorced

Extravagant life

Billy: addicted to gambling

Michael: New Porsche showing he is living beyond his means.

Perceived Opportunity

Use of position to create ineffective control thus reducing the chances of being not.

Larry: role was to pre-establishment limits and information. This might provide him with opportunity to perform crimes without fear. Classifying and inputting sales gives him an opportunity to alter the sales contracts.

Carol: she might take the opportunity of a responsibility calculation of payment to perform financial statement fraud. Her approve of sales classification could invite the opportunity to fraud the company.

Michael: His connection to high executives' medical device distributors give him opportunity of stealing sales to sale them for his direct gain.

Billy: having 10 years' experience in sales gives him opportunity to sale stolen products purpose for gambling money.

Rationalization

Perpetrator conscious mind formulate the acceptance idea for his action of engaging in unethical behavior. Lame excuse are always given to unethical action which make it to differ with associated crime activity (Stewart, 2015). These leads to the fraud diamond theory.

Fraud Diamond Theory

Capability

A person capability of traits and skills can activate the act to commit fraud these includes one having position, intelligence, ego, coercion, deceit and stress. One with capacity to understand the internal control, and uses its weakness to perform manipulation in fever of fraud to commit.

Cases

Larry: being in the company for 10 years he understand it better especially the sales section. As a leader of the team the capability to use other sales to fraud the company.

Carol: As she as being in the accounts department ever since she knows how to perform financial statement fraud and other account cover-ups.

Position

One takes advantage of the position having the capability to commit fraud. He can be bias and use his position in fever of close friends to commit fraud or other employees as tool of fraud.

Larry: uses his position to give Amy more secondary sales in the last two years when she missed her sales quota thus using secondary sales quota to get her bonuses

Recommendations

CIC is likely to be faced by three types of fraud which are misappropriations of cash, goods, and accounts. To prevent misuse of cash, by strict internal control system followed on payment. Fraud involving goods is prevented by keeping control of physical verification of goods and follow up on issues of clearance and forwarding. Knowing your employees and listening to their grievances will assist in the identification of possible fraud risk

References

Cao, M., Chychyla, R., & Stewart, T. (2015). Big Data analytics in financial statement audits. Accounting Horizons, 29(2), 423-429.

Appelbaum, D. A., Kogan, A., & Vasarhelyi, M. A. (2018). Analytical procedures in external auditing: A comprehensive literature survey and framework for external audit analytics. Journal of Accounting Literature, 40, 83-101.

Stewart, T. R. (2015). Data analytics for financial statement audits. Audit Analytics, 105.

Mansor, N. (2015). Fraud triangle theory and fraud diamond theory. Understanding the convergent and divergent for future research. International Journal of Academic Research in Accounting, Finance and Management Science, 1, 38-45.