Fraud Got Fraud The Prevention of Business Fraud
Fraud
Got Fraud? : The Prevention of Business Fraud Lauren Ferraro
Objectives ● Explain what exactly fraud is ● Discuss major cases of fraud, mainly concerning scandals like Enron ● Discuss laws put into place to prevent major fraud cases ● Decide which law has proved more effective ● Discuss the different tactics of preventing fraud
Fraud ● Purposeful deception ● Person aims to have a gain o Financial o Personal http: //skcdocs. com/blogsktx/tag/fraud/#sthash. c. Uvo 6 ao. L. dpbs
Enron Scandal of 2001 ● ● Sixth largest energy company in the world August 2000 stock prices were $90. 75 November 30, 2001 they were $. 26 Declared bankruptcy December 2, 2001 http: //www. riskencyclopedia. com/articles/enron/
Enron’s Downfall ● Covered up financial weakness to investors ● Arthur Andersen destroyed financial documents ● Overstated profits by $600 million http: //www. sefinanzas. com/noticias/2966 -reviven-el-nombre-arthur-andersen-una-decada-despues-del-colapso
A Catalyst ● Enron, among others, showed SEC an issue ● Stock market crash ● Public demanded tighter restrictions http: //caleb. 21 stcenturyenetwork. com/mystery-cycles-stock-market -crashes-mystery-shemitah-year-every-7 -year/
Sarbanes-Oxley Act ● ● More responsibility Tighter restrictions Require outside audit Enforced by SEC http: //www. slideshare. net/Rizze. Caminong/sarbanesoxley-act-9354519
Companies (Audit, Investigations and Community Enterprise) Act ● UK version of SOX ● Very similar to SOX ● Enforced by SFO http: //www. cyogate. com/ispy_fraud_prevention. html
Comparison of Laws ● Punishment much more severe with SOX ● Code of Ethics required with SOX ● Management must state effectiveness of internal controls to auditors with SOX http: //www. formalesonly. com/pills/semen-increase/semen-pills -comparison-chart-truth-to-be-perfect
SEC Annual Report
SFO Annual Report
Are These Laws Effective? ● Two different methods: o Actively Searching o Reacting http: //achievemarketing. hubpages. com/hub/Effective-and-Successful-Teams-Is-it-Teamwork-or-Performance-that-Matters
Which Method is Better? ● Actively Searching o Prevents dramatic stock market changes o Insiders o Gets down to the bottom of it http: //imgbuddy. com/magnifying-glass-detective. asp
Which Method is Better? ● Reactory o More cases brought to light o Reveals flaw o Cheaper o Less secretive http: //www. counsellingincanberra. com. au/2011/01/responding-and-reacting/
Opinions? http: //www. dylanmalloch. com/2014/06/opinions-do-yours-stand-up-to-scrutiny. html
Tying It All Together ● Fraud affects everyone ● Laws implemented to protect consumers ● Debate over which fraud fighting method is better http: //bridalmusings. com/2011/06/a-unique-wedding-invitation-tying-the-knot-literally/
Any Questions? http: //stateimpact. npr. org/ohio/2011/08/16/any-questions-for-sb-5 -sponsor-state-sen-shannon-jones/
Citations "Companies (Audit, Investigations and Community Enterprise) Act 2004. " ICAEW Home. ICAEW, 6 Apr. 2005. Web. 6 Nov. 2014. <http: //www. icaew. com/en/technical/legal-and-regulatory/company-law/modernising-uk-company-law-history/companies-audit-investigations-and-community-enterprise-act-2004>. Dowdney, Adam. "Corporate Governance In The UK And U. S. Comparison | The Metropolitan Corporate Counsel. " Corporate Governance In The UK And U. S. Comparison | The Metropolitan Corporate Counsel, 1 Dec. 2001. Web. 25 Nov. 2014. <http: //www. metrocorpcounsel. com/articles/6173/corporate-governance-uk-and-us-comparison>. "Got 'em, Gotham. " The Economist Newspaper, 12 July 2014. Web. 15 Oct. 2014. <http: //www. economist. com/news/business/21606838 -company-accounts-detectives-collar-another-suspect-got-em-gotham>. Guerra, Jorge. "The Sarbanes-Oxley Act and the Evolution of Corporate Governance. " The CPA Journal April (2004): n. pag. The CPA Journal Online. Web. 23 Sept. 2014. James, Geoffery. "Four Reasons to Love Sarbanes-Oxley. " CBSNews. CBS Interactive, 26 Feb. 2008. Web. 14 Sept. 2014. <http: //www. cbsnews. com/news/four-reasons-to-love-sarbanes-oxley/>. Kamar Ehud, Pinar Karaca-Mandic, and Eric Talley. "Site-wide navigation. " Do the Benefits of Sarbanes-Oxley Justify the Costs? Empirical Evidence in the Case of Small Firms. RAND, n. d. Web. 17 Sept. 2014. <http: //www. rand. org/pubs/research_briefs/RB 9295/index 1. html>. Li Sherry, Evelynn Mc. Dowell, and Erin Moore. "Accrual Based Earnings Management, Real Transactions Manipulation and Expectations Management: U. S. and International Evidence. " Journal of Global Business Management 4. 2 (2008): n. pag. The Journal of Global Business Management. Web. 18 Sept. 2014. Moylan, John. "Chequered History of the SFO. " BBC News. BBC, 22 Aug. 2012. Web. 15 Nov. 2014. <http: //www. bbc. com/news/business-19323170>. National Fraud Authority. Fighting Fraud Together Quarterly Update – January 2013. PDF File Peter, Gwynne. "Beneficial or Detrimental Legislation? . " - The pros and cons of Sarbanes. Oxley. Kellogg School of Management, 1 Nov. 2008. Web. 17 Sept. 2014. <http: //insight. kellogg. northwestern. edu/arti/beneficial_or_detrimental_legislation/>. Rapoport, Michael. "SEC: Accounting Board Is Dragging Feet. " WSJ. 14 Dec. 2014. Web. 5 Jan. 2015. <http: //www. wsj. com/articles/sec-accounting-board-is-dragging-feet-1418605107>. Reuters. "New SEC Task Force Eyes 'emerging Financial Fraud'" CNBC. Cnbc, 29 Apr. 2014. Web. 9 Dec. 2014. <http: //www. cnbc. com/id/101623433#. >. Serious Fraud Office. “Annual Reports and Accounts”. 2014. PDF File. Serious Fraud Office. “Operational Handbook”. 2014 PDF File. "The Devil's in Their Details. " Action Fraud. 20 Nov. 2012. Web. 14 Nov. 2014. <http: //www. actionfraud. police. uk/thedevilsintheirdetails>. The Economist. "The real scandal. " The Economist Newspaper, 19 Jan. 2002. Web. 14 Sept. 2014. <http: //www. economist. com/node/940091>. "The Fall of Enron. " NPR, 22 Jan. 2001. Web. 10 Mar. 2015. <http: //www. npr. org/news/specials/enron/>. "The Ones That Get Away. " The Economist Newspaper, 30 July 2005. Web. 11 Oct. 2014. <http: //www. economist. com/node/4233843>. Tysiac, Ken. "What Accounting Fraud Risk Factors Will Attract SEC’s Attention? . " What accounting fraud risk factors will attract SEC's attention? . AICPA, 13 Dec. 2013. Web. 7 Oct. 2014. <http: //journalofaccountancy. com/News/20139258. htm>. White, Mary. "The Challenge of Coverage, Accountability and Deterrence in Global Enforcement. " IOSCO 39 th Annual Conference. IOSCO. Rio de Janiero, Rio de Janiero. 1 Oct. 2014. Speech.
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