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Fraud types: Crooked scenarios
Student Name:
Institution:
Date:
• Crooked Scenario 1.
Initial data regarding how the Drill and Crooked company
conducted their operations indicates that a number of types
of frauds were committed.
The two companies engaged in economic extortion fraud
through the inflation of the contract cost from $50 million
to $125. it was also noted that the Drill’s corporate
headquarters never monitored the contractual terms, and
had fewer controls, thus, facilitating the commitment of the
fraud.
Mack engaged in corruption fraud by giving out some cash to
police in order to secure his freedom.
• Fraud types: Crooked scenario 1
Fraud of financial statement was committed also
through records falsification. Also, Mack was
prepared to offer lavish trips to union representatives
to ensure that things run smoothly. This shows that,
he was prepared to commit illegal gratuities fraud,
and should be investigated further.
Conflict of interest is also evident in the case where
Stagger Lee and Mack relatives made a bid on the
construction of the pipeline project.
• Control Measures: Crooked scenario 1
Economic extortion fraud committed could have been
controlled if “right to audit” clauses were implemented in
the contract.
With the help of implementing proper accounting awareness
and measures, every corrupt practice could be avoided.
With the help of keeping proper book-keeping, unlawful
gratuities could be lessen.
By offering a framework of practical reference where fraud
cases concerning interest’s conflict are recognized and
solved, interest conflict could be controlled.
• Legal Measures: Crooked scenario 1.
A legal suit should be instituted against the two companies
for engaging in economic extortion practices.
Mr Mack should also be sued for bribing the police and
misusing the company’s finances.
Investigations should be conducted to proof the alleged
instances of conflict of interests.
• Fraud types: Crooked scenario 2.
On the Crooked company, schedule of depreciation
suspected fraudulent acts were identified from the initial
observatory audit done.
Depreciation fraud was committed through a deliberate
manipulation of data in order to boost its financial income
and profits.
Salvage values were inflated and the assets useful period
were increased anomalously.
• Control Measures: Crooked Scenario 2.
A roll-forward analysis should be
reviewed specifically for the cost and
depreciation account balances.
A reasonable testing of current-year
depreciation expenses should be
verified and validated.
Proper documentation of assets
movement including disposal and
transfers.
• Legal Measures: Crooked scenario 2.
The employee accountable for the data misrepresentation
about the depreciation of assets needs to be interrogated
along with enabled for explaining why this type of
irregularities were recorded.
If investigations finds the employee as having committed a
fraud, legal action should be preferred against him/ here
therein.
• Fraud types: Crooked scenario 3
Concerning conflict of interest, job applications are
introduced by it.
It was found out that most of the applicants who had
applied for an investigative job were closely related to the
Crooked company’s top management.
• Control Measures: Crooked scenario 3.
At all levels, interest conflict needs to be checked
when undergoing an investigation into a suspected
duplicitous acts.
There needs to be a framework in which newer
workers are cross-checked for ascertaining their
identities.
Candidates who fabricate their relations needs to be
prosecuted.
Fraud types: Asset misappropriation
Asset misappropriations occurs when individuals who are
entrusted with protecting the assets of an organization steal
from it.
Such fraudulent act leads to loss of revenue, loss of
managerial reputation, and possibly causing bankruptcy to
the organization.
• Control Measures: Asset misappropriations.
In controlling asset misappropriations, all employees must
be known well; their character, lifestyle, and personality
should be decoded so that any deviations from the norm will
be readily observed.
Tight internal controls should also be instituted to check
and curb asset fraud.
All employees should be given a compulsory vacation.
External auditors should be invited regularly to audit the
firm’s assets.
• References:
O’Gara, J. D. (2004). Corporate fraud: Case studies in
detection and prevention. Hoboken, N.J: Wiley.
Nick, K., & Robin, G. (2011). Corruption: The New
Corporate Challenge. Palgrave Macmillan, Basingstoke, GB.
Albrecht, W. S., & Albrecht, W. S. (2009). Fraud
examination. Mason, OH: Cengage Learning South-Western.
…
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