Corporate Fraud Assignment: Motivational Factors Of Frauds
Question
Task: These are the activities undertaken by an individual or business entity that is committed in an illegal manner and are designed to give benefit to a business entity. The accounting fraud means deceiving activities which results in reduction of profit. It is the most awful example of unethical activities in the business sphere which not only causes loss of money but also leads to terrorism and money laundering (APCA,2013). As per the information provided by Australian government, till 2017, there were around 300 crimes which were led by accounting fraud. . The variation in the policies made by the government had reduced the fraud. The major kinds of accounting frauds are based on the hacking of computer accounts data of the business entities, thievery of plant and stock, falsification of cheques and credit card fraud by third parties. In the year 1999, KPMG surveyed that only 22 % of fraud is carried by the external parties of an organization. Eventually, income statement fraud was a contributing issue to the current financial crisis that is threatening the efficiency, liquidity and security of the capital markets and debts (Black, 2010). Furthermore, it is also evident composition of board, amount of meetings, and financial experts proportion are related to unusual turnover in fraud firms during the time period in which fraud is committed (Agrawal et al.,2017). The Australian government has come out with a powerful plan to prevent every type of frauds whether it is linked with accounting or finance (finance.gov.au,2019). Numerous kind of preventing measures have been introduced to detect frauds like whistle blowing, internal reporting. This research will high light all the above consideration.
Research Questions and Research Objectives
Research Questions
1. What are the factors that encourage the employees to perpetrate accounting frauds ?
2. Why insider trading takes place ?
3. How is the performance of the organisation effected by the accounting fraud ?
4. What induces the companies to operate unprofessionally ?
5. What are the methods undertaken by the companies of Australia to control accounting fraud?
Research Objectives
• To identify the employees motivational factors of to commend fraud.
• To identify the techniques that are used to commit fraud.
• To evaluate the causes and effect of accounting fraud on the performance of an organisation.
• To examine that why insider trading takes place.
• To examine the performance of the fraud prevention policies that are made by the government of Australia to prevent accounting fraud.
• To examine the prominent role of auditors.
List of keywords used for Literature Review
• Types of fraud committed.
• Motivational factors to leads to fraud.
• Measures to control Fraud.
• Whistle blowing and internal Trading, Size of business.
• Role of Audit Committee.
• Segregation of duties.
Answer
A summary of the theory progression in the field
The present corporate fraud assignment sheds lights on the concept of motivational factors behind committing fraud and preventive measures obtained to control the fraud in the corporate field. The era of business development is prone to corporate frauds to a great extent. Over the years, the notions of corporate fraud have managed to show a considerable increase in Australia. The effectiveness of corporate governance and the mechanism used by the government for the development of corporate activities have been hindered due to the presence of corporate fraud. Therefore, based on this proposition, it is important to be able to identify the definite loopholes that are prevalent in the corporate sector of Australia, which account for the initiation of corporate fraud in the very first place. The study developed in the corporate fraud assignment will be initiating a structured literature review to gain insight into the definite factors that are responsible for the commitment of fraud and preventive measures, which need to be undertaken.
In addition to this, it has also been found that the presence of fraud scandals tend to create certain incentives, which is considered an attempt into the improvement of firm performance. On the other hand, the presence of corporate fraud further results in an indication that the revelation of fraud does not essentially increase the definite net benefits that fraudulent activities tend to bring. It has also been found from the research conducted on the case scenario of corporate fraud assignment that fraud rates in Australia tend to result in measuring the most commonly used payments. It helps in monitoring the definite movements in fraud to effectively understand the effectiveness of prevention initiatives associated with corporate fraud.
Common themes and findings across the article
According to the research aspects carried out by Agrawal et al. (1999), it has been found within this corporate fraud assignment that the authors tend to emphasize the notions of management turnover and governance along with the changes that are associated with the revelation of fraud. It has often been found that frauds do not essentially prompt managerial changes and there have been instances, which highlight such issues. It has been found that the top managers of a definite firm, tend to commit fraud, which further makes them experience vast revelations of corporate fraud. It is considered to be a subsequent change in top management and that of the board of directors. The authors have further stated the varied reasons, which are responsible for increasing the managerial turnover. One of the reasons is that fraud is considered to be costly to the firm. The initial notions of publicity of fraudulent results in the loss of firm development.
As per the propositions mentioned in APCA (2013), the article tends to provide an extensive review of the definite fraud rates and frauds that are prevalent in Australia. It has been found that there are varied statistical data that has been derived out of the notions of corporate fraud in Australian firms. Since the year 2006, industry-wide card and cheque fraud statistics have increased to a great extent. It tends to account for the commitment to counter payments fraud for the mitigation of such issues in an effective manner. Another perspective, which comes into the forefront, the payment industry data for 2014 has shown fraud on Australian payment cards, which continues to increase to a great extent. The majority of the increase is due to the increase in card-not-present fraud. In Australia, it has increased by 42%.
On the other hand, it is also stated herein corporate fraud assignment that the perspectives carried out by Black (2010), the author tends to talk about the notions of control fraud, which has managed to seemingly legitimate entities. People who tend to use them as essential fraud weapons fundamentally control it. The situation of control fraud occurs when high position personnel tend to subvert the organization for the sake of personal gain. However, in most of the Australian firms, it has been prevalent that the notions of control fraud are found to be predominant. However, most of the firms tend to follow a similar optimisation strategy within a similar financial field and tend to extend as well as hyper-inflate.
In addition to this, as per Lee and Fargher (2013), it is significant to create a provision of an effective whistle-blowing system. It would help in providing the employees with a higher level of disclosure. It would be further associated with the variation in the whistle-blowing exposures. The authors further tend to talk about the definite facets of the whistle-blowing system. It is further associated with the likelihood of financial misconduct, which eventually results in external whistleblowing.
What are the different themes and findings obtained in the context of corporate fraud assignment?
Based on the definite research proportions carried out by Agrawal et al. (1999) in his article is that there are certain empirical findings, which need to be taken into account while preparing corporate fraud assignment. It is associated with the revelation of fraud, which is potentially costly to the firm. This is because the management turnover and governance eventually result in influencing the managerial tin0ver that tends to facilitate governance structure. Another major finding, which has been derived from this definite article is that. The presence of external members of a firm often tends to create accounting fraud, which is equally harmful to most of the firms in Australia.
The major finding of APCA (2013) is that data capture has increased card-not-present fraud. It is considered one of the major causes of the increase in cybercrime. However, one of the major initiatives undertaken by the Australian government is that introduction to tokenization. The use of tokenization is believed to reduce cyber attacks in the payment industry. There has been an increase in the initiation of a full-hosted payment gateway to their online customers for online financial transactions.
Black (2010) has emphasized the increasing predominance of control fraud within the premise of most of the Australian firms. On the other hand, the author has propagated certain definite strategic interventions, which will be effective in the prevention of control fraud effectively. The foremost way to initiate a proper and lender optimization of accounting control fraud is to have extreme growth in business.
The corporate fraud assignment explores the words of Lee and Fargher (2013) which suggested that the result the extent of whistle-blowing disclosure is significant. It refers to the fact that the whistle-blowing disclosure is optimistically associated with the probability of anonymous reporting to a great extent. The existence of these definite disclosures results in a higher level of inventory.
Summary of managerial articles
The research carried out by Agrawal et al. (1999) essentially revealed that managerial changes tend to impose certain costs and offers, which are associated with offering benefits to the firm. In addition to this, the revelation of the fact that the firms tend to commit fraud has been revealed and they often tend to alter their costs and benefits to a great extent. On the other hand, the proficient changes towards triggering a management or director replacement are associated with the increase of fraud, which essentially takes place. The likelihood of the managerial changes essentially takes place for varied reasons and the authors have emphasized the initiation of fraud increase that is associated with managerial change.
The primary finding of the article used to prepare corporate fraud assignment lies in the fact that the notions of fraud tend to decrease firm value. This is because it is associated with a decrease in firm value and earnings. On the other hand, another major finding, which has been derived is that the presence of fraud tends to signal a low firm value. A fraud, even though it does not cause a decline in form value but often reveals the unfavorable information about the firm. The fact that the firm if performing poorly would eventually increases the expected net benefits that are associated with changing managers. It tends to further increase the likelihood of the change.
Summary of study limitations and future research direction
The study examined in the corporate fraud assignment initiated a structured literature review, which helped in understanding the extent to which corporate fraud is being detected. It also helped in the modification of the definite preventive measures, which need to be taken into account for controlling fraud within the premises of the corporate field. After assessing the notions of the definite research processes and procedures, it is important to effectively identify the potential limitations of research as well as that of the future research direction, which the structured literature review tends to behold. After understanding the significant elements of the literature review, there have been varied limitations of the research direction that has been identified. It further tends to act as a manifestation of the extent to which the limitations are to be addressed effectively. The primary research limitation, which the articles managed to behold is that there was a lack of research propositions in the research articles. For the proper preventive initiatives of corporate fraud, it is important to be specific about the approaches that are being proposed. However, there was a lack of evidence for the provision of specific objectives that would be effective for the mitigation of fraud. On the other hand, the articles used to prepare this corporate fraud assignment had their findings derived out of different approaches that have been used for methodological analysis. Apart from this, the scope for the future direction of research lies in the fact that these articles have somehow managed to pave the way for directing the association of definite research processes effectively. The major future scope of the research direction discussed herein corporate fraud assignment is that the use of these articles would further help in understanding the extent to which the research direction has managed to create a proper insight into the further research propositions, which can be taken into account.
Reference list
Agrawal, A., Jaffe, J.F. and Karpoff, J.M., 1999. Corporate fraud assignment Management turnover and governance changes following the revelation of fraud. The Journal of Law and Economics, 42(S1), pp.309-342.
APCA, 2013. Explanation of Cheque Fraud Categories. Payment Fraud Statistics. APCA.
Black, W. K. 2010. Epidemics of “Control Fraud” lead to Recurrent, Intensifying Bubbles and Crises, working paper, University of Missouri-Kansas City, SSRN-id 1590447.
Lee, G. and Fargher, N., 2013. Companies’ use of whistle-blowing to detect fraud: An examination of corporate whistle-blowing policies. Corporate fraud assignment Journal of business ethics, 114(2), pp.283-295.
