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Ldi Fidd HR N.:i:,,..,.,, - .,,",.."" NT R T&/D

1. Financial statement fraud can have significant negative consequences for organizations and stakeholders. Major companies have experienced financial reporting fraud over the past decades, resulting in lost shareholder value and sometimes bankruptcy. 2. The magnitude of fraud is substantial, with estimated global fraud losses exceeding $40 billion annually. Medium-sized organizations experience higher rates of fraud compared to large corporations. Leadership of small organizations have closer relationships with employees, resulting in less oversight and higher potential for fraud. 3. Perpetrators of financial statement fraud can include senior executives and managers seeking to meet financial targets or enrich themselves. Strong internal controls and oversight functions are needed to deter fraud committed by persons in positions of trust or authority.

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Nikhil Mallviya
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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0% found this document useful (0 votes)
73 views7 pages

Ldi Fidd HR N.:i:,,..,.,, - .,,",.."" NT R T&/D

1. Financial statement fraud can have significant negative consequences for organizations and stakeholders. Major companies have experienced financial reporting fraud over the past decades, resulting in lost shareholder value and sometimes bankruptcy. 2. The magnitude of fraud is substantial, with estimated global fraud losses exceeding $40 billion annually. Medium-sized organizations experience higher rates of fraud compared to large corporations. Leadership of small organizations have closer relationships with employees, resulting in less oversight and higher potential for fraud. 3. Perpetrators of financial statement fraud can include senior executives and managers seeking to meet financial targets or enrich themselves. Strong internal controls and oversight functions are needed to deter fraud committed by persons in positions of trust or authority.

Uploaded by

Nikhil Mallviya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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'h.
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taud i5 sl.o kno\D 6
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fiDaocill5brcmctu Nnh a p,rdi!ul?. bir,lo' example comrrriS Lixbiti.i.s in ordd ro inprove
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orsoianiois orrllqpcs add st s arc srbj...10 iraud or a nunbrtoaocca\ionr o!{$L rEL
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rumoiL in rhc U.S. c.pir.l m ko6, r lo$ ot slrrcholdrt valuc, and, ln somc .ars, 0r
btrikrutty ollhc lompany ibclf Allhongh I is genmll] a...rcd hd rhc Strbans o{ky Ad
hs imprcycd coao.rlc sovcmancc:nd d.crcded rlr f.d.i.e oladud, rccc ndi.s ?M
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i Tlr Aso.hrion otccnifird Fr Esmoes. (;\cFrr) r0l0 Rqr

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rduJ in irsrepon.qN by rar rhc no{ ..nrt. I th'
F.di$ 1os olsl.7 miLLioD per ifficatr su .r' prdi.pinr srimMd rrd {h. qrnrt
orgrnir.ion losA 5% or ils
ro rraul (rch
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drai $r.r rirjoi th. Fcdian Losi c $d b), rlc o..dr i.nat riaud.ses i oy ludr
Lls$l40,000.Moarharotr. fifthorrh.sc!r.s.:redtosdot'h6. mi on.nf
niudsreponedrousl iedanEdi&0fi3monrhsbero.eb.idsdcr.drd
.,FnuduLenr financirr Repodris:
1993-100r," fion $e comfrir.c or sl.n\.ring
nd rhn

hryzi

mhsiotr (rhe 1010 coso rnld Rcpon).


31? frauds iNsriEared b) rhe u.s
.s lnd Exchanee co'rmhsion (s!c) i.om
(he mediai dorrs lmoun{ ofc.ch inn,n.e or raLLd hid
1993 ro 1007 and ldmd

rb

s..u

ltuee times 60n ihe lerel ir a sihl!. 1999 nud.r, from a nredni ot sl I
mlLrio' in rhe 1999 nudy b srz m rlior Id lddilroi, rh. ncdiin size ollhe comDatr]

inmccd

A "?009 xr'lr, rr!!r" ol 204 execuriv$ ot U S nr, ru I \ L i unu rucorud


5150 Diir 0,.!, dr,,r tolnJrhat65 pro of rj(Nnrr\ifduqlfrrrdrobcd

! riL.n.( ft

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Fir./si p{s .i Llt app'oriDuicl ?,100 bN,*s F)!r.rLr

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ir indudcs d.r d idprolod srtm esDanunb{ordcd

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(h

tbr rhe trgen or[E rou sia .arsones .crcnud theRepodchcj!h.tiniled


moun! oflinmcirlard huniu rcsokrcs avaikbG for fraud prvc ioi in lnalt oqadzlions d
a m?jor drivn ortu eulc ir addirion,leld*ship orsnaD orsmja{or iyti.a|y hru clo*r
rcb.ion:liips *i$, and rd i,i, rlrir employ*s, md dru, hay ens.sc itr !$s oE6ighr tft.rt
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counhns T[. ncdia h6 aponed $aidats ard b$tiuprcies D cotrioaaies. such s. suibeam K
man, En,or, crobs crosi.g (usAl, nccl Masrc, polty p{k (uK) Md rnH hsrcla
(Adnlir) said$ sod3ls in developcd .outuhs, $,hich hrrc sotlrislilatd crpirat hrrtus
md rgdario,i.

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mrket Asi counris: hNe also e
ts..i Bali md s rk
M5 Oro+ (r don{ a), Bmgkok Bmk or con,i!rce (rhaitrd), unired EDcimrts }rhd
(_Mrlayslr), sinnLrg Ehdoftr andHyuid.i (Korc.) rhe co{oD1e.otlap*s orlc.en!1im*j
curmi"arii! !i.h mxsive coIrpscs, strch 6, d)osc otEtron D rlrc U s., Hllr in Ausht]4 and
srilD, i, L,dja har sussened irar ihde e. i3lor.r),nemic probhnr facine rhe way jn {r,ilh
co'po.arior add cc openr

E.e hll r.Diile :.countin! :6&h iJivoLri,3 mrlLtr lompui.s *ond*i{lc, !.h as
&..xca*f .mun arion paid to some clos hlr rtici qoeiions about (he fldionshf
The

bc'y.di.rrri:r L.ddship, fiimciar in.edires rid rln,n..ii, miscponing (chen. r0r0). Durhil
lenr linanci!L Eponin! mcidenk in rft U s, simiLarcoaoat
in rv{al oihr couit !r
ol toreisn !d,roc'!
a(ouning na!& qcrc commided blln.iti.s rhd (oo(lord thcr busines* in morc tlu oi!
.ounry d mon orftse enlilies aie also lnod oi ! s !o.k crchbg*:Thc lis. ofcolj.rat
tiariala.c.unr ,g$Ddrh inlheU.S. h exronsiv!. atul eilh oie L!6 rhe cruk olono or i'ot
regulrities. T'ble l ni.rlrA i lmpc ol u.s. .ofrFni.r lMl
E/ofrhen frauJr enl fino..l Eponins adiyilies (ts!da*1.
?001) O(6.a, ii,r! trqo.i emariona!compini.s b$ci in.ighr dillcFn!.ontri$ l']vc rlro
commiGd fiiM.lJ accoudr trg tauds.Txbl.r id.nlifi- rh*enine iot.narioniLcompini{ rad
,c nauf oJ llie :c.omd's iftgula tls dicy comntrtd (Taub 200r)

k"lC*dolcorDor

i;;a;;fiM;;

A..otrtrrin

b|llqLetn4siENM.q[i

orrq r.adi otjrei6cenr inra{ includc zzzz Bci (1936), ph} Mortr992), c0ndan. fl99rJ.
!r'rE Mmgefr.d' (r9e3l, sbbeai' (2002), Patrrlxr c001, aLons wirf a hon or o'h{j
s." rlt lotrg thr flch.d a nilrcrLm6s h:002 ti rhe rJs
d riig rhrtr Etron and
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'1.3o\1h{.

biJ 'xggrssiyc cmingt trsds r.d cnrd iiro numenu! comtL*


ranjadions ro ichicve rhos 0.gds " Adhu. atrddsf, r Ndl.tionn a(ou[ig fid, l.r.hr
linc b.svccn conn,Llins md a diring blLtr. Tlr .ollrpf .a hrgc comprtus sond*idr (HtH
instrranc., EnroD, wondcomt have sp..ked livcry irrerce in rhoano!n(o
eicddadilo6 rc.civc in.ldilion !o audtu lss.lnllie Aulraik.n!n
peidAdderei,1Sl r miLlionloreldn*ni.csandASl.6 mLLLio ror coosullaDcy s ices ro.rlE
1q99r1000 fi;in_.nfiriri;l tri t_.noiirjniinijj, ntiG tiicn dered rhd rh. dl. df cxrmal audhots
hrs beei $bjed b rrE i flrme ord'e boftd ordircdon ofrlE.o pry As r.nnines (?00i)
rac! {hirc rh. EDn,n/An1rc.\cn rdtlionrhip w6 exreme, irs
bc.omc so muddLcd rlrar adnor indcp.ndeme n

iidicdjoir of hotr 3 rdlrioishio .!n

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oxhy

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lailures d poor cc, rhs, i5 b.giminS ro cmc'!. Fo. ii{rd.c, B.dawi (r00) vcry aplly

jd

obrnrs: iAdcLrhi4l;r !xampl., {c siven a very tow?a% rtriDsby tNrlturomtsh ;hokrt


sean$ or is cc icorc. tn Eropc, p m.td 3rd Royrt holJ e3rc nnk.d jn $e botun
qudire orconpr(tcs in 6c iDJcx provm!d by covtrmdc. M.rns rnriDa(ionr "simit t],,ltr
coaomrc Liba'l-hadrsu.d.dir tairu'r:frlis5ln rsp.cr orborh wo
inueding nm,bs or rcsriclra Do* m fiddlng thil poor cc is a teadifg ftdor in poo.
coeodrtons and
rcdomanc.j manipuLared firadcirr .erid, and
rlAulatory bod ies ecurcmlyrryrsrDrMlr'7.rdd.omcr yexiiingd.G$ifrrr.rponing
sy$.d. rn lddirion, dhcusion on ie rehvrtrr otto nsic rccodis n d.rccrrs a(ou ing
scmdak ha em(Rcd in rcccn. ycir.

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mcchinisms ccodinsly, a nunber of clnds hrvr b..n .onducrd ro
prveird,ep.$ibitiry otsimil*scaDdats in the rodhcomins firurc.,
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