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The calm before your business fraud storm is an article that outlines several case studies that shows how various frauds occurs, their results in the business, workers and the potential investors. Today frauds are at the peak which can be attributed to falling economy of the whole globe. The process of running a fraud investigation is a process which many people including some business professionals who do not know how it is carried out, their roles in study and various outcomes. The emergence of frauds like Enron, WorldCom, Tyco, Parmalat, Adelphia, Société Générale, the Ponzi scheme recently perpetrated by Bernard Madoff and fraud at Satyam it is crucial for businessmen to learn the process and its impacts. According to the sufferings resulting from these frauds all business stake holders are putting weight in fraud investigation and their view of it.
Potential business frauds must be planned for in advance since policy and level-headedness do not go together in most of the businesses. Since there is no defined way of approaching fraud investigation, it is crucial for the management to undertake a suitable act incase a fraud or a suspected fraud is reported. A response that is not enough to a reported fraud may result to rework and wastage of time and possessions. This can be as a result of involving persons related to the alleged fraud or those who can not be trusted- those who can easily compromise with their integrity. This can also be a result of involving incompetence persons in the investigation, who lacks knowledge on fraud investigation. A competent response on the other hand, makes sure to provide total information to help in decision making. The quality of fraud investigation lies behind practicality and timeliness. Implementation of a fraud framework is essential in any business therefore it should either not be followed or it should be followed patchily.
Fraud has had so many definitions and according to the American Heritage Dictionary, fraud is a trickery activity purposely done in order to obtain an illegal gain. Collins dictionary defines investigation as a cautious exploration or assessment to determine truth. These definitions do not deliver the practicality of detection of a fraud activity. Fraud investigation involves understanding not only what a fraud is but the impacts of the same. The five W's are allegorical questions are essential in this research to find the evidence. Types of fraud can either be categorized as asset misappropriation, financial statement fraud and corruption. Asset misappropriation is whereby the assets of an organization are used in a manner that does not benefit the business. The following examples show some form of asset misappropriation. In the case of an engineering firm in Miami, the former CFO, accounting manager and accounts payable supervisor embezzling $35 dollars and investing in real estate, luxury cars, yacht, jewelry and gambling activities is a good example of misappropriation since the thing they invested on do not have an added economic value. In the case of Arkansas trucking company the self interest of the president and CFO had paid themselves multiple salaries is also an example.
A kind of financial statement fraud is where Dell overstated its profits by 50 million dollars but this was corrected by involving outside professional service firms. Corruption is evidently seen from Pacific Northwest financial services by selling fake surety bonds. But the amount the owner got he spent it on himself. The investigation conducted by kmart revealed of former employees had violated the ethics of the company. Since each case is different investigations must be carried in the context of the fraud alleged or committed. A typical investigation will include: occurrence of the incident, preparation and association, collection of data and facts, suggestion and reporting, remediation and follow up steps. It should also be noted that irrespective on the type of investigation done, the guideline should be time.