Fraud The Perfect Fraud Storm - 1420 Words

Financial Statement Fraud Option #2 The perfect fraud storm occurred between the years 2000 and 2002 involving two of the largest energy and telecom corporations in the United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concealing the fraud until exposed and rectified. Nine Factors of the Fraud Perfect Storm Essentially, all three elements of the fraud triangle must be present for fraud to be committed: pressure, opportunity, and rationalization. Additionally, nine factors provided the atmosphere for the perfect fraud storm of 2000 through 2002. The nine factors included: economy, moral values, incentives, expectations, debt, accounting rules, auditor dependence, greed, and educator failures (Albrecht et al., 2012). When combined with the elements of the fraud triangle these factors enabled organizations such as Enron and WorldCom to commit the fraudulent activities that resulted in this perfect storm. Among the nine factors of the perfect fraud storm; the economy, incentives, and expectations all fulfilled the three elements of the fraud triangle providing the necessary motivation for management to succumb toShow MoreRelatedFinancial Statement Fraud : A Perfect Fraud Storm1304 Words   |  6 PagesFinancial statement fraud is something that has become more commonplace than it shou ld be. Many different events will often lead up to a rash of companies participating in financial statement fraud. Between the year 2000 and 2002 there were a number of factors that led to what appeared to be a perfect fraud storm according to our text (Albrecht, Albrecht, Albrecht, Zimbelman, 2012). Nine of those will be looked at here. It will also be discussed as to what some of the common ways financialRead MoreSusan Cooper s Extraordinary Circumstances855 Words   |  4 Pagesanything, even commit fraud. Bernie Ebbers told the senior staff that they would lose everything if the company did not improve its performance. This leads into my second pressure, which deals with personal lives. Employees were receiving tremendous benefits due to the company’s great performance. However, if the company did not improve, people’s salaries would be cut or even worse, their jobs would be cut. That is why so many people were willing to engage in the fraud, because they felt WorldComRead MoreEnron And The Enron Company1502 Words   |  7 Pagesbecoming influential in political appointments and received billions of dollars of loans and benefits from international projects, and concluded â€Å"the lack of obvious ethical constraints on any one s part demonstrates a major facilitator for Enron s fraud† (pp.1221-1222). Giroux (2008) recapped as Enron’s stock price declined from $90 per share in August of 2000 down to $33 a share, followed by the firing of Fastow, however the damaged has been done to Enron’s credibility and borrowing capacity asRead MoreCase Analysis : James Guisti, A Trusted 14 Year Employee And The Manager Of An Office Of Greater1111 Words   |  5 Pagescollateral to secure them. James was then instructing other trusting employees of the bank to cosign the checks and cash the loan funds. Due to inefficiencies in bank policy, and the fact that the loans were small, the audit team was unable to detect the fraud. Also, in order to avoid being caught for unpaid loans, when the loans would mature James would take out new loans to pay off the old loans. James Guisti was in a role in the bank that allowed him to sign loans up to a certain dollar amount – thoseRead MoreControversy in the Pharmacy Industry1142 Words   |  5 Pagesthis highly competitive industry. One major issue that can have a huge impact is pharmaceutical fraud. Fraud in pharmacy is defined as activities that can result in false claims to insurance companies and Federal Healthcare programs like Medicare and Medicaid, in order to receive financial gain within the industry. Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs are just some of the many schemesRead MoreThe Threat Of Cyber Security1452 Words   |  6 Pagessentence, so marketers usually never think about security. Results/Findings What is a data breach? A data breach, in simplified terms is â€Å"a disclosure of information to an unauthorized party† (Whitler, A Wake-Up Call To CEOs And Marketers: The Perfect Cyber Security Storm Is Approaching, 2016). To be more specific, an attack can be broken up into three types; a breach, compromise, or intrusion. Each are defined below: 1. Intrusion: Unauthorized access to networks or systems 2. Compromise: An attacker isRead MoreBarings Bank1275 Words   |  6 Pagesposition of general manager to Barings Securities in Singapore. As general manager he oversaw both trading and back office needs, something uncommon in the industry due to the fact that it eliminated necessary checks and balances that would prevent such fraud from occurring. He had authority to deal in futures and options order for clients or other firms within Barings and arbitraging price differences between Nikkei futures traded on the SIMEX and Osaka exchange, it was a low risk strategy meant to makeRead MoreThe Collapse Of The Corporate Rock Star1686 Words   |  7 PagesThe story of Enron is one of a perfect storm--the right people in the right places with the right ideas, but the exact opposite. Moreover, it is a story about accounting fraud, deception, the ugly side of corporate culture and, most of all, greed. In entry level accounting classes, it is taught that publishing accurate financial sta tements and being honest in accounting practices are fundamental to maintaining a healthy business and achieving lasting success. Enron is a shining example of whatRead MorePorsche Changes Tack1008 Words   |  5 Pagesand should have been avoided.† (Special Investigative Committee of the Board of Directors of Enron Corporation February 1, 2002) This may, in the end, be the most critical question related to Enron. Why did it happen? Was it indeed the â€Å"perfect storm,† in which the wrong combination of leadership, business evolution, market behaviors, and the ‘times’ all combined to create a monster, or was it something else? This is commonly the most hotly debated question in any classroom, and often is theRead MoreInferno And The Divine Comedy1834 Words   |  8 Pagescanto making 100 total. Each stanza in the poem is three lines longs as well and works in a triple rhyme scheme—aba bcb cdc. Dante uses three as a symbol of the Holy Trinity—Father, Son, Holy Spirit—to show that God is behind everything. God provides perfect justice and His creation is to fulfill His will. In Dante’s construction of Hell, he has nine circles of Hell as well as Satan making a total of ten. 10 and 100 is a symbol of the Holy Trinity as well as it is a symbol of the singular nature of God