ACC 667 Topic 3 DQ 2
Select an example of a corruption case and discuss how a perpetrator would commit this type of fraud and what types of internal controls management could implement to help to prevent or detect this type of fraud. Solid academic writing is expected, and any sources used should ...
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ACC 667 Topic 3 DQ 2
Select an example of a corruption case and discuss how a perpetrator
would commit this type of fraud and what types of internal controls
management could implement to help to prevent or detect this type of
fraud. Solid academic writing is expected, and any sources used should be
cited. In your response, do not use the same example as already posted
by a classmate.
Instructor's Comments:Dear Raquel, Thank you for your respectful post
and corruption example. Continue to share your interpretations of
research. They add value to your learning community. Best, Dr. Deb
, According to the Association of Certified Fraud Examiners' (ACFE)
fraud tree, an area of corruption is bribery. One form of bribery are
kickbacks (Association of Certified Fraud Examiners, 2019). This occurs
when an employee receives a financial benefit, usually cash, from a
vendor for preferential treatment. For example, an employee may
arrange to purchase goods or services from a vendor at an inflated price.
In return, the vendor agrees to kickback some of the extra money to the
employee. In another example, an employee in a trusted position could
arrange for the purchase of fake products or services. The collusion with
the vendor would then involve splitting the funds received.
There are steps an employer can take to implement controls related
to kickbacks. Like other fraud risks, a company should have a well
established and communicated policy concerning kickbacks and
consequences. It also helps to have recurring employee training related
to ethics. A lot of kickback fraud cases are discovered because they are
reported by coworkers and vendors. Providing simple and safe methods of
reporting fraud is an important control. A company should also have
strong controls related to vendor relationships. A process should be in
place to establish, validate, and approve vendors to ensure they are
valid. Procurement policies should also review charges and vendor billing
to ensure that costs are realistic and in line with competing vendors
(Munoz, 2017).
Fraud magazine, a publication by the ACFE, has an article related to
kickback schemes. The article describes an auditor’s engagement to
investigate a tip of kickback fraud. The fraud was committed by an
executive at National Steel Corporation (NSC). He extorted millions in
kickbacks from vendors who overbilled NSC. It is interesting to read how
the auditor put together the fraud triangle connections and then
collected evidence to solicit confessions (Tie, 2010).
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