1. As presented in the module this week, the fraud triangle consists of:
Rationalization: justification of dishonest actions
Opportunity: ability to carry out misappropriation of cash and organizational assets
Pressure: motivation or incentive to commit fraud
As a fraud investigator, it is a key skill to be able to identify potential risks to a company based on the three areas of the triangle.
For this discussion, try to recall a circumstance in an organization you worked with or knew about in which opportunity, pressure, and rationalization played out in a mutually reinforcing way as the fraud triangle illustrates. If you cannot or choose not to recall an actual instance, you may fabricate a fictional scenario.
Describe the circumstance you have chosen and explain how individuals reacted to the associated incentives and/or how they might have reacted. Then offer suggestions regarding the types of remedies and changes that could be implemented to “break” the triangular relationships and lessen the incentives for fraudulent activity.
Formulate your answers based on the material in this week’s module and also on the video below.
Video Summary from the website listed below: Kimberly Ginn, of Baker Tilly Virchow Krause, LLP, uses the Fraud Triangle to help us understand how fraud occurs.
McGurrin, D., Jarrell, M., Jahn, A., & Cochrane, B. (2013, August). White collar crime representation in the criminological literature revisited, 2001-2010. Western Criminology Review, 14(2), 3-19.
2. Being able to import data into MS Excel is a critical skill for the forensic investigator. Once data is in Excel, it can be manipulated and studied for analytical purposes. The textbook and this week’s module both provide tutorials on the proper steps to import data into Excel. For this discussion, import data into Excel from three locations (Access, another Excel sheet, text, or internet) and then describe the process step by step in detail and document your successes, challenges, and struggles in the forum.
Formulate your answers based on the material in this week’s module. Use the video below to augment the information you already have. This video provides some great tips on working in Excel.
Video summary from the website listed below: Tutorial explaining 10 of the most common must-know features in Microsoft Excel 2010. Excel is used worldwide, and this tutorial shows slightly more than the basics of how to perform useful tasks.
Albrecht, W. S., & Hoopes, J. L. (2014, October). Why audits cannot detect all fraud (cover story). CPA Journal, 84(10), 12-21.
3. Ratios are a key element in the forensic examiner’s toolbox. Ratios can provide a great deal of forensic information and can be used to filter out many fraudulent schemes, such as kickbacks. For this discussion, develop a list of 10 ratios that would be worthy of forensic analysis in a large company. List the ratios you have decided to discuss and then describe what each might signify and why each would be worth investigating. Examples of the types of ratios you might select include payments to one contractor versus another, invoices from one employee versus another, revenues versus expenditures, etc. Be as specific as you can in your identification of the items being compared and what sort of discrepancies might engender suspicion.
Formulate your answers based on the material in this week’s module and augment that information with the video below, from the N S Toor School of Banking. This video provides a nice summation on ratios and financial analysis.
Lepeudry, P. & Cheadle, A. (2013). Proving staff kickback allegations: How to gather evidence efficiently-regional analysis-Asia-Pacific. Retrieved from http://www.kroll.com/CMSPages/GetAzureFile.aspx?pa…
4. Studies have revealed that financial statement fraud often begins as a “slight exaggeration,” fabrication, or inflation of business records. Such a reporting discrepancy could be as minute as adding several dollars to an expense account. Research tells us that such small actions often grow into larger illegal misrepresentations. In order to prevent financial fraud in the first place we need to ensure that minor fabrications are not tolerated by the company.
In your current or past employment experiences, ponder several instances where you came to be aware of questionable activity. Describe the situation, how you handled it, and how some sort of forensic countermeasure could have prevented it from occurring. (If you have been so fortunate as to not have such an experience, fabricate a fictional scenario for this exercise and describe how you would have responded to it.)
View the video below and ponder how this greedy CEO committed fraud without alerting his employees.
Hussain, S. N., & Manzoor, S. R. (2014). Enhancing firm financial position by reducing white collar crime through financial crime control remedies: A study of KP hospitals. Pakistan Journal of Commerce & Social Sciences, 8(2), 384-398.
***Each answer must be 300 words minimum. Support your statements with citations. Sources are provided however you can add more if they are scholarly sources (no .com sources, no sources older than 7 years).