The Fraud Tree -Corruption
Occupational Fraud and Abuse Classification System
Source:“2020 Report to the Nations. by the Association of Certified Fraud Examiners ACFE
Contributed by By Alia Noor, FCMA, CIMA, MBA, Oxford fintech programme, GCC VAT Comp Dip,COSO Framework.
Associate Partner Ahmad Alagbari Chartered Accountants, UAE
HOW IS OCCUPATIONAL FRAUD COMMITTED
At the highest level, there are three primary categories of occupational fraud.
Fraud Tree-Part- 2
Corruption is Wrongful use of influence to procure a benefit for the actor or another person, contrary to the duty or the rights of others or Wrongful acts designed to cause an unfair advantage or Abuse of power for private gain
As per 2020 Report to the Nations. by the Association of Certified Fraud Examiners ACFE , corruption — includes offenses such as bribery, conflicts of interest, and extortion—falls in the middle in terms of both frequency and financial damage. These schemes occur in 43% of cases and cause a median loss of USD 200,000.
Understand Fraud Tree and remain vigilant to save yourself and organization from Fraud in this difficult time!!
Forms of Corruption:
1-Conflict of Interest
A conflict of interest occurs when an employee or agent – someone who is authorized to act on behalf of another- has an undisclosed personal or financial interest in a matter that could influence his professional role.
- Purchasing scheme
- Purchase schemes, which involve the overbilling of a company for goods or services by a vendor in which an employee has an undisclosed ownership or financial interest.
- Sales Scheme
Sales schemes, which involve the underselling of company goods by an employee to a company in which the employee maintains a hidden interest.
Bribery schemes, which involve the offering, giving, receiving, or soliciting of a thing of value to influence a business decision.
- Invoice Kickback
Kickback schemes, which occur when vendors make undisclosed payments to employees of purchasing companies in order to enlist the employees in overbilling schemes.
- Bid Rigging
Bid-rigging schemes, which occur when an employee fraudulently assists a vendor in winning a contract through the competitive bidding process.
Illegal gratuities schemes, which involve giving or receiving something of value to reward a business decision.
Economic extortion schemes, which occur when an employee demands payment from a vendor for decisions made in the vendor’s favor. Refusal to pay the extorter results in harm to the vendor.
“Asset misappropriation”- PART-1
which involves an employee stealing or misusing the employing organization’s resources, occurs in the vast majority of fraud schemes (86% of cases); however, these schemes also tend to cause the lowest median loss at USD 100,000 per case
click here for part 1: