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• eBook-Kapitel aus dem Buch Accounting Fraud

  Introduction

  Professor Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …indicating that the occurrence of white-collar crime (management fraud) and related aberrational behaviour of em- ployees (employee fraud) has been reduced… …risk of fraud in the current environment. 16% stated explicitly that their company management was not committed to fighting fraud. The findings… …17 Chapter 1: Introduction 1.1 Fraud: A Constant Threat to Companies around the World Fraud is nothing new. History has shown that it has… …long been part of our society. In 1941, a well-known American judge said: “Fraud is as old as falsehood and as ver- satile as human ingenuity.” Several… …years later, in 1949, a criminologist from Indi- ana University named Edwin H. Sutherland coined the term white-collar crime, referring to fraud… …committed by the elite upper-world business executive, against either shareholders or the public. Sutherland, one of the pioneers in fraud research, defined… …. According to PricewaterhouseCoopers’ “Global Economic Crime Survey 2007”, fraud remains one of the most problematic issues for companies worldwide. In the… …respondents who suf- fered fraud also stated that this had caused significant damage to their businesses. The survey found that the level of damage was… …decreased. Although different sectors are impacted by different types of fraud, no industry is immune from the threat posed by economic crime. The key… …findings of KPMG’s “Fraud Survey 2009” are quite similar: fraud is a ma- jor threat to companies regardless of their size, location, or industry. About three…

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• Alumni stellen sich vor

  …vermittelt ein großes Wissensspektrum in den Themengebieten Governance, Risk, Compliance und Fraud Management. Mit diesem Wissen sind die Absolventen in der… …Michael Müller hat als Offizier an der Universität der Bundeswehr München Wirtschaftswissenschaften mit dem Schwerpunkt Internationales Management… …. Seitdem berät er Unternehmen und Behörden in den Themengebieten Business Continuity Management, Krisenmanagement sowie IT Performance & Strategy. Aktuelle… …Mitautor des BSI Standards 100-4 Notfallmanagement und Lehrkraft an der School GRC für das Themengebiet Business Continuity Management. „Das MBA-Studium… …Risk, Fraud & Compliance, Heft 1/2010…

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• Steinbeis-Management-Reihe

  …Informationsfreiheit, Erik Liegle, Deutsche Bahn, Barbara Scheben, KPMG AG und Alexander Geschonneck, Partner der KPMG AG „Forensic Management – Ermittlungen unter… …aktuellen Datenschutzregeln Ermittlungen zu handhaben sind, und ob der Datenschutz eigentlich Tätern oder Unternehmen nützt. Quelle: ZRFC Risk, Fraud &…
• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 13: WorldCom (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …improve results when management felt this was needed. Governance failures at WorldCom The setting in which the fraud occurred was marked by serious… …senior management was final and not be challenged. Most of WorldCom’s people did not know that the fraud was occurring. Rather, it occurred as a result of… …fraud was not confined to Ebbers, Sullivan and Myers. Others at WorldCom either knew or suspected that senior management was engaged in improper… …Accounting Fraud in U.S. Companies 93 Case 13: WorldCom (2002) When Enron collapsed at the end of 2001, worried investors searched for who… …were managed. Former President George W. Bush condemned the fraud as “outrageous” and vowed to address the problems shaking Corporate America. The… …SEC said that WorldCom’s accounting improprieties were of “unprecedented magnitude”. But as enormous as the fraud was, it was accomplished in a… …relatively mundane way. The modus oper- andi of the fraud was rather simple, and it was carried out over a comparatively short period of time. Yet the… …reverberations of the fraud would echo around the world of business for years to come. Background: WorldCom from 1983–2002 The fraud was the consequence… …source of the culture that gave birth to this fraud. In 1983, he had discovered the telecom business and founded WorldCom. In the 1990s, the Clinton… …in this endeavour. Yet he continued to feed Wall Street’s expectations of double-digit Accounting Fraud in U.S. Companies 94 growth, and he…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  The Warning Signs of Fraud

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …, projected, or forecasted results – Overly unstable organizational structure (e.g., high turnover of senior management or board members) Fraud Case… …functions Fraud Case Analysis: Lessons Learned 271 (4.) Top management – Ineffective implementation, communication, or enforcement of the… …other laws and regulations (criminal record) – Claims against the entity, its senior management, or board members alleging fraud or violations of… …Fraud Case Analysis: Lessons Learned 272 (5.) Relationship between management and auditor – Frequent disputes with the current or predecessor… …: Consideration of Fraud in a Financial Statement Audit, October 2002 AICPA: Management Override of Internal Controls: The Achilles’ Heel of Fraud Prevention… …Fraud Case Analysis: Lessons Learned 268 3.2 The Warning Signs of Fraud 3.2.1 A Schedule of Fraud Red Flags In almost all of the cases… …described in this book the signs of impending doom have been apparent for some time – for those who wished to see them. According to numerous fraud… …detected more quickly had the warning signs not been ignored. These warning signs are often being referred to as fraud risk factors, fraud risk indicators… …not necessarily indi- cate that fraud is occurring within the organization. Their presence, however, either individually or in combination, could… …indicate the occurrence of fraud or an in- creased likelihood thereof. Red flags should therefore, when encountered, trigger a higher level of…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 5: Phar-Mor (1992)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …collusive management fraud was almost inconceivable. The perpetrators made phony journal entries to increase inventory and decrease cost of sales… …Accounting Fraud in U.S. Companies 46 Case 5: Phar-Mor (1992) In 1982, Michael “Mickey” Monus and a friend, David Shapira, visited a “deep… …growing businesses in the U.S. had been committing massive accounting fraud. Investigators eventually determined that from at least 1987 through 1992… …un- covered the fraud. Phar-Mor’s board of directors insisted that it was plenty active, but fully deceived until it got a tip in late July 1992. Monus… …day, a travel agent who Accounting Fraud in U.S. Companies 47 booked flights for league players received a USD 75,000 check for WBL expenses… …activities and helped to expose an intricate accounting fraud. The fraud was carefully carried out over several years by persons at different organ-… …, recognized inventory pur- chases but failed to accrue a liability, and double-counted merchandise. Members of the fraud team later indicated that one reason… …the fraud was not detected by the auditors was because Phar-Mor executives knew exactly what the auditors would be looking for. They made sure that… …informed Phar-Mor in advance which stores they would visit. The Phar-Mor fraud team stocked the four selected stores correctly, and allocated the phony… …“Cookies”. The fraud team used these entries to inflate inventory and earnings. As it would not have been practical to carefully scan all the packets, the…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Types of Fraud

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …less-than-arm’s-length transactions – Improper disclosure of management compensation – Improper disclosure of fraud committed by officers, executives, and others in… …257 Chapter 3: Fraud Case Analysis: Lessons Learned 3.1 Types of Fraud 3.1.1 A Classification System for Fraudulent Acts: The Fraud Tree… …Joseph T. Wells, chairman and founder of the “Association of Certified Fraud Ex- aminers” (ACFE), has developed a classification system – known informally… …as the fraud tree – that accounts for all of the most common types of fraud. The fraud tree encompasses a wide range of misconduct by executives… …2007, p. 46; ACFE 2008, p. 7). Occupational Fraud Fraudulent Statements (Accounting Fraud) Asset Misappropriation Corruption Fictitious Revenues… …Economic Extortion Exhibit 3: The Fraud Tree Fraud Case Analysis: Lessons Learned 258 According to Wells, the types of occupational fraud can… …generally be broken down into three broad categories: asset misappropriation, corruption, and fraudulent statements (accounting fraud). Within each of these… …three major categories, there are several sub-categories of fraud scheme types. It should be noted, however, that a number of cases described in… …this book involve aspects of more than one of the three basic categories. For example, several cases involve both accounting fraud and asset… …misappropriation, or both accounting fraud and corruption. In these cases where there are multiple schemes, it is impossible to subdivide the losses in order to…

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• eBook-Kapitel aus dem Buch Accounting Fraud aufdecken und vorbeugen

  Annäherung an das Thema und Forschungsgegenstand

  Dr. Corinna Boecker

  …(Fehlleistungen 1994), S. 34 ff.; Gross, Gerhard (Regelungen 2005), S. 90 ff.; zu den bedeutenden Auswirkungen von Top- Management Fraud siehe auch Zahra, Shaker… …1 1 Annäherung an das Thema und Forschungs- gegenstand 1.1 Relevanz von Accounting Fraud Accounting Fraud – i.S.e. Verstoßes gegen… …ein mahnendes Beispiel für die Auswirkungen fehlerhafter Prüfung bleiben. Die Gefahr von Accoun- ting Fraud ist jedoch nicht nur bei großen Konzernen… …A./Klinger, Oskar (Internes Kontrollsystem 2000), S. 1; Albrecht, W. Steve/Searcy, David I. (Increasing Fraud 2001), S. 58 ff. 5 Vgl. Klinger, Michael… …, Zabihollah (Financial Statement Fraud 2002), S. 69; Welp, Cornelius/Leendertse, Julia (Konflikt 2007), S. 112 ff.; Nölting, Andreas/Wilhelm, Winfried… …A./Priem, Richard L./Rasheed, Abdul A. (Top-Management Fraud 2005), S. 818. 8 Vgl. Ernst & Young (Wirtschaftskriminalität 2003), S. 4 und S. 13. 9 Vgl… …offensichtlich an- ders dar15. Das Themengebiet Accounting Fraud kann von zwei Seiten betrachtet wer- den. Während sich einerseits die Unternehmen zwar der… …Bedeutung des Zufalls auch Wehling, Jörg/Weiß, Christian (Abwehr 2005), S. 104. 14 Vgl. ähnlich auch Comer, Michael J. (Corporate Fraud 1998), S. 5 ff… …Verschär- fung der Vorschriften für kapitalmarktorientierte Unternehmen, um damit Ac- counting Fraud möglichst zu verhindern, zumindest jedoch die Quote… …seiner Verant- ___________________ 16 Während die Aufdeckung als der schwierigere Teil im Rahmen der Bewältigung von Accounting Fraud gilt, nimmt die…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 3: Crazy Eddie (1987)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 36 Case 3: Crazy Eddie (1987) When Crazy Eddie, Inc., blew up in a financial scandal in 1987, the debacle… …in- volved just about every kind of accounting fraud then known, as well as receipts skimming and money laundering. Although the total dollars involved… …multi-pronged fraud, probably one of the twentieth century’s most infamous frauds. And even though the fraud is more than two decades old, it provides vivid… …financial statement fraud of all time, but for outrage- ousness, it is going to be very hard to beat.” In 1969, Eddie Antar, a 21-year old high school… …individuals, including Eddie Antar’s wife and mother, were receiving huge salaries for little or no work. Accounting Fraud in U.S. Companies 37… …the most frequent manipulations occur in inventory. In the Crazy Eddie fraud, Eddie Antar “borrowed” merchandise from cooperating suppliers to boost… …Accounting Fraud in U.S. Companies 38 inventory. Besides, Antar’s underlings shipped stock from one store to another overnight, so that it could be… …auditors. “Where were the auditors?” was a question posed repeatedly when the public learned of the Crazy Eddie fraud. The auditors did not detect the… …doctored numbers, and were later sued for malpractice (see Wells 2000, pp. 91–95): Accounting Fraud in U.S. Companies 39 – They had not… …inventory observations were conducted, the auditors inadver- tently contributed to the fraud. For example, rather than climb over boxes in the warehouse…

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• eBook-Kapitel aus dem Buch Accounting Fraud

  Case 18: Qwest Communications International (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Accounting Fraud in U.S. Companies 122 Case 18: Qwest Communications International (2002) Denver, Colorado-based Qwest Communications… …revenue im- mediately rather than rateably. The fraud surfaced in the summer of 2002, after several critics had publicly ques- tioned why Qwest was… …billionaire investor Philip F. Anschutz (the company’s founder) resigned as chairman of the board. Accounting Fraud in U.S. Companies 123 The… …Wall Street that it used any means necessary to meet its “outrageously optimistic revenue projec- tions”. “Qwest senior management created a… …. “Accounting rules, policies or controls that in- terfered with meeting revenue targets were stretched or ignored outright, creating an environment for fraud… …employees inter- nally referred to such transactions as “one hit wonders”). When senior management realized that it could not meet the projected growth… …sales increased each quarter as senior management continued to project significant year-over-year and quarter-over-quarter revenue growth. In 2001, in… …that the company “reset expectations and put the best face on to Wall Street that we can”. However, senior management rejected a reset… …. Accounting Fraud in U.S. Companies 124 Eventually, Qwest understated USD 231 million in expenses from 1999 to 2002, relating to employee vacations… …former CEO Joseph Nacchio and six other execu- tives with engineering a “massive financial fraud” at the telecommunications com- pany. “This was definitely…

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