Fraud and the Global Business Environment

Fraud and the Global Business Environment

Introduction

Fraud is regarded as an intentional act that seeks to secure the author or a third party an illegal gain at the expense of a person. At company level, can be given through altered financial reporting, misappropriation of assets, improper expenditures and revenues, among others. The consequences of corporate fraud are economic losses, image and confidence of customers and investors. Some examples of corporate frauds occurred in the world are Enron, the energy company that try to hide their true level of debt through complex transactions with its subsidiaries, WorldCom, accounted telecommunications firm charges about 4,000 million dollars in deferred expenses in order to conceal their true losses, Global Crossing, fiber optic company recorded as revenue, income should be deferred, Vivendi, European communications entity manipulates its earnings in the consolidation of information with the business group, to obtain greater borrowing capacity, and Adelphia Communications, cable television company that is undercapitalized by granting enormous personal loans to its members with the consent of its directors (Fisher & Hoffmans, 2009). These, among many others, are some of the most notorious cases in the world of corporate fraud.

Discussion

The crime most feared by companies in developed countries is fraud, even compared to other crimes such as terrorism, kidnapping, sabotage and theft. Far from being under control this scourge appears to be gaining momentum, helped largely by a greater complexity in business, the increasing globalization of the movement of funds, the difficulties involved in dealing with different cultures and increased use of technology as the Internet. This has led to a sense of increased risk among businessmen from various sectors and countries. It is a hoax to a third party, breach of trust, fraud, simulation , etc.

The term "fraud" refers to the intentional act of the administration, staff or others, resulting in a misrepresentation of financial statements may involve:

Manipulation, falsification or alteration of records or documents .

Misappropriation of assets

Suppression or omission of the effects of certain transactions from records or documents.

Recording of transactions without substance or backing

Misapplication of policy statements.

Types of fraud

It is considered that there are two types of fraud: the first one is done with the intention clear financial misappropriation of assets of the company. The second type of fraud, is the presentation of information as intentional fraudulent financial aimed at altering the accounts annually.

internal frauds are those organized by one or more people within an institution, in order to obtain a benefit.

external fraud are those that are made by a person or persons to make a profit, using sources outside such as: banks , customers , suppliers , etc..

Despite the complexity of the economic problems we face this crisis will be over, but first need to rebuild the moral foundations of market economy, if they prefer capitalism: corruption, fraud, abuse, inequality, injustice, distrust, is such that if we maintain the social legitimacy of the market economy and effectiveness of the reforms and economic policies, we must build a politics of common good ...