Corporate Fraud in Today's Business Environment



[Name of the Professor]

Corporate Fraud in Today's Business Environment

Introduction

The assignment is in reference to the case study of F& C International. It provides a brief description of Corporate Fraud in today's business environment. The assignment also discusses new ways to eradicate business fraud and the types of internal controls needed over inventory and how this control will act as a deterrent to fraudulent activities, in detail. Further, it assesses the act of Catherine Sprauer, Division Controller of F&C International and discusses how accounting firms can modify their accounting procedures to minimize the risk of financial fraud. Types of financial fraud have also been discussed in this assignment. The auditor's responsibilities and issues in auditing have also been stated. The assignment also sheds light on the failure of Securities and Exchange Commission's to detect fraudulent activities in publically traded companies. Lastly, the assignment evaluates the legislation and regulatory agency's oversight to increase or decrease corporate fraud, by giving my position.

Discussion

Corporate Fraud in today's business environment

Corporate fraud is an illegal activity performed by an individual or a company in a dishonest way so that the fraud-committing individual or company may get an advantage of the dishonest act. Corporate fraud may have a huge economic impact on the overall business activities. The best way to prevent corporate fraud is to develop effective policies and maintain physical check and balance on the company. By developing an effective set of policies, a company may limit the extent of fraud. Corporate fraud is also known as a white collar crime. However, despite investing million dollars on the development of anti-fraudulent policies and austere legislation, corporate fraud is still alive. Corporate fraud is still happening on lower as well as higher levels. Sarbanes-Oxley, a United States federal law forced in 2002, introduced the core changes to the regulations of corporate governance and financial practice. The World Bank's annual World Governance Indicators rated the regulatory quality of U.S at 90.8 at a 100 scale in 2009 (Marshall.A 2009).

Three new ways to eradicate business fraud

To prevent corporate fraud is much better than recover losses after the fraud. The Association of Certified Fraud Examiners (ACFE) conducted a survey in 2008 and stated that 7% of the annual revenues of the U.S organizations are lost by fraud. To eradicate business fraud:

Business owners must have awareness of the laws and regulations and must ensure to communicate these laws to their employees so that they may not attempt to indulge in fraudulent activities. ACFE can conduct trainings for the awareness of the laws.

As a director of a company, one must remain proactive throughout the month establishing checks and balances on the internal and external fraud control systems.

There must be a federal law regarding the amount of use of paper checks circulating in a company. According to ACFE, the most common fraudulent activity is tampering and manipulating of checks.

Internal controls needed over inventory and how these controls will act as a deterrent to ...