Question.2583 - For the week's discussion,study Table 8-5 Summary of Ways to Prevent and Detect Fraud in Romney chapter 8 and briefly describe one item from each of the four sections: (1) Make Fraud Less Likely to Occur; (2) Increase the Difficulty of Committing Fraud; (3) Improve Detection Methods, and (4) Reduce Fraud Losses (Romney & Steinbart, 2021). For at least one of the areas, include one real-world example (cited). You can research fraud prevention and detection on official websites like: The Journal of Accountancy http://www.journal ofaccountancy.com/ and The CPA Journal http://www.cpajournal.com/ You must choose different items from each of the four sections from your classmates. Prior to writing your initial post, reply to the Discussion 4:I reserve...thread in Week 4 using the following format: "Ireserve [insert fraud prevention #1],etc:• This will ensure that each student covers four different preventative measures.
Answer Below:
Topic- increase the difficulty of committing fraud Fraud can be a costly and damaging issue for businesses of all sizes. To prevent fraudulent activities, it is important to increase the difficulty of committing fraud. This can be achieved through a combination of measures such as implementing strong access controls, conducting background checks, training employees, using fraud detection tools, conducting regular audits, monitoring financial accounts, and implementing a whistleblower program. Require autonomous keeps an eye on execution, for example, compromise of two autonomous arrangements of records, where viable. Having strategies that require an outsider to survey or test exchanges can incredibly limit purposeful and accidental mistakes. The fact that the individual makes it imperative playing out the survey isn't answerable for the actual undertaking. This could incorporate inquisitive of the administrators with regards to how certain strange circumstances are taken care of. Essentially, we are apathetic animals, and Kenny brings up that despite the fact that the steps are being followed, administrators/workers could become indiscreet and "overlook the genuine motivation behind controls" which could prompt misrepresentation. References: "The Role of Fraud Detection Software in Reducing Occupational Fraud," Association of Certified Fraud Examiners, 2018. "10 Steps to Preventing Employee Fraud," Forbes, 2019. The fraud triangle is a tool for explaining a scammer's motivation. But what precisely is fraud? Fraud is defined as an intentional deception that is perpetrated by a company or individual for financial benefit. To put it another way, fraud is a dishonest act done to obtain an advantage or make money illegally. The unlawful deed also benefits the perpetrator while hurting other parties. For instance, it is fraud when an employee steals money from the cash account of the business. The employee would gain from receiving extra money at the cost of the business. We go over the elements of the scam triangle below. The Fraud Triangle – Opportunity Opportunities are situations that give rise to deception. It is the only element of the fraud triangle over which a business has total control. Examples of situations that present chances for fraud include: 1. Weak internal controls-In order to guarantee the accuracy of accounting and financial information, internal controls are applied. There are chances for fraud because of weak internal controls, such as a lack of supervision, a lack of proper task separation, and inadequate process documentation. 2. Poor tone at the top-A business with a negative tone at the top is more likely to fall victim to fraud. Tone at the top refers to senior management and the board of directors' dedication to acting ethically, with integrity, and honestly. 3. Inadequate accounting policies-The way that items on the financial statements are recorded is referred to as accounting practices. Employees may have the chance to manipulate numbers if accounting procedures are poor (inadequate). The Fraud Triangle – Incentive The motivation to perpetrate fraud among employees is referred to as incentive, also known as pressure. As an illustration, consider the following items as motivations for fraud: 1. Bonuses based on a financial metric-Revenues and net income are typical financial indicators that are used to evaluate an employee's success. Employees who receive bonuses based on financial metrics are under pressure to reach goals, which could lead them to engage in fraud. 2. Investor and analyst expectations-Pressure to perpetrate fraud can arise from the need to keep or increase stock prices while also meeting or exceeding investor and analyst expectations. 3. Personal incentives-The desire to make more money, the need to pay off personal debt, a gambling addiction, etc. are examples of personal incentives. The Fraud Triangle – Rationalization The phrase "rationalization" alludes to a person's defense of fraud. Fraudsters frequently use the following examples of justifications: 1. “They treated me wrong”-When someone harbors resentment toward their boss or employer, they might think that committing fraud is a good method to exact revenge. 2. “Upper management is doing it as well”-An individual might emulate those more senior in the corporate hierarchy if there is poor leadership at the summit. 3. “There is no other solution”-It's possible for someone to think that if they don't commit fraud, they could lose everything (like their employment). References Romney, M. B., Steinbart, P. J., Summers, S. L., & Wood, D. A. (2020). Accounting Information Systems (15th ed.). Pearson Education (US). https://ccis.vitalsource.com/books/9780135573082More Articles From Accounting
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