Corporate Fraud



Corporate Fraud

Introduction

Fraud is a concern than companies and governments of the world has witnessed and pondered over since the time businesses began to flourish. It has existed since the beginning of trade and business and seems to have no end. A fraudulent activity, in simple words, is an activity in which one party conducts an unlawful, illegal or unethical activity with the purpose of personal gain or to inflict damage on the other party/parties. It is very common in companies and organizations. Usually, the purpose of a corporate fraud is to save finances. In other words, most corporate frauds are done for financial and monetary gains.

Fanny Mae was also involved in one such activity in the year 2008 when the CEO understated the value of its high-risk subprime mortgages in order to save its finances. The authorities responsible for ensuring fraud free business in the USA identified fraud in this activity and filed a law suit against the company. Unable to justify its actions, the company had to pay billions of dollars as penalty and ultimately fired the CEO from the company.

The Federal National Mortgage Association, generally known as Fannie Mae is a government sponsored venture sanctioned by Congress to keep funds coursing to mortgage loan specialists, to help reinforce the United States mortgage and housing businesses, and to underpin competitive home possession. Fannie Mae is a national mortgage fund ensemble, but they do not offer home credits. The venture stand behind mortgage banks, and national monetary institutions, thrifts, credit unions, and alternate monetary foundations in every of the 50 states to securitize or purchase the mortgage advances they issue, empowering them to renew their funds so they would be able to provide loans to more home owners. Likewise, the venture work to keep subsidizes streaming to uphold rental housing.

Mortgage Oversight Office had concluded a 27-month investigation which had shown, beyond doubt, that the managers of the second largest U.S. mortgage agency thoroughly falsified accounts between 1998 and 2004. So far so normal, in a country where, after the outbreak of 'Enron' and nobody is surprised about anything. Conclusions provide a convincing statement to have demonstrated that accounting fraud was carried out with the only real purpose possible was to increase the remuneration of senior executives. In fact, between 1998 and 2003, former President and CEO of Fannie Mae would have earned $90 million, of which 52 were linked to achieving specific objectives. If doubts remain, the investigation of internal communication companies and agencies in question may have just set the record straight.

Fraud in companies

Financial fraud continues to be a major concern for the nonprofit sector, for practitioners, and scholars alike. A recent survey of ethics in nonprofit organizations by the Ethics Resource Center (ERC) found that fraud was on the rise among nonprofit organizations. According to the Association of Certified Fraud Examiners (ACFE) fraud has become more prevalent in all three sectors. Many prominent nonprofit organizations in the United States such as the United Way of America, the ...