Question

1. How does “fraud examination” differ from “forensic accounting”

2. How does occu- pational fraud and abuse differ from other kinds of fraud? Give examples of other fraud types.

3. Sutherland’s contribution to criminology, in addition to giving us the term “white-collar crime,” involved developing the theory of differential associ- ation. What are the implications of this theory with respect to occupational fraud?

Answer 1

Answer:

Requirement 1

Fraud examination and forensic accounting are different but related. Forensic accounting is the use of any accounting information or expertise for courtroom drives and can involve fraud, bankruptcy, business, valuations, divorce and other litigation. Fraud scrutiny resolves claims from tips or complaints, and executed by accountants, law enforcement officials, corporate security specialist or private investigators. They differ from each other because one used in the courtroom, and the other one is not.

Requirement 2

Most occupational frauds and abuse are financial offences, and fraud is any crime that uses cheating as its principal protocol; could be by force, trickery, or appropriation. Occupational fraud and abuse are the use of one’s occupation for personal development through the thoughtful misuse or misapplication of the employing organization’s funds or assets. The offender of occupational fraud is any employee of an organization. They classified into three general categories: owner/executive, manager and employee. Fraud is a false depiction of a matter of fact, by words, by conduct, false, ambiguous accusation, or by cover-up of what should have disclosed. It is a dishonesty calculated for advantage. Examples of occupational fraud and abuse are asset embezzlement, fraudulent statements, corruption, pilferage and petty theft, false overtime, use of company properties for personal benefit, and sick time abuse. Examples of fraud are buying and selling properties, real estate properties, personal property such as stocks, bonds, and copyrights, mistake in a contract such as a deed, constructive fraud, and breach of a legal duty.

Requirement 3

Sutherland’s main point was that the inclination to commit crime is learned, not inborn. He believed that criminals learned both the methods of committing crimes and the value systems of criminals in small, close groups. This explains, in part, why prisoners normally return to crime after they are let out of imprisonment. While behind bars, they talk to other convicts and learn the details of how to better commit their crimes. They also are imparted the exclusive values that “street” criminals hold, such as “getting something for nothing” and “society owes me a good living.” Occupational fraudsters, on the other hand, learn their methods by working with books, records, inventory, and other assets. They often hear about other employees who were not successful in their crimes. Rather than being dejected by someone being caught, the potential criminal often learns a different lesson: that the method the other person used to commit fraud was not working and that a different one must be conceived in order to succeed. They also learn the value systems that some businesses have: Profit is everything, and the end justifies the means. Such values obviously send the wrong message.