GROUP MEMBERS

EPETY ATANGANA KAREN

TOPIC; TYPES AND CAUSES OF FRAUDS

PLAN;
Define fraud
Give the types and examples
Then causes of frauds caused by Pressure, Opportunity and
Rationalization

Fraud
This is a misleading conduct done by someone, with the objective to get an illegal advantage
or to harm someone else's (victim's) rights. Bankruptcy, credit card fraud, frauds done in
security and wire fraud are all examples of fraud that one is vulnerable to in this world.
Fraudulent conduct can be planned and performed by a large organization, big or small groups
or just one person.

Types of Fraud:
Financial frauds: It involves tax fraud, credit card fraud, bankruptcy, mortgage fraud
Consumer frauds, Corruption, Asset misappropriation, Insurance and banking fraud
Fraudulent behavior is common and can be tracked with certain red flags. Financial frauds are
the most common frauds that one can face in this world. Mortgage frauds include identity
theft and income fabrication and sensitive information counterfeiting that is used to extract
money as a loan from an organization or individual with the false promise of returning the
borrowed amount in a stipulated time interval. However, people encouraging mortgage funds
are usually tricksters who never return the promised money, thus causing the money lender
distress.
Other than bank frauds that involve faux initiated transactions and possible money laundering,
security frauds are often common. Identity theft, posing as someone else to execute any
ulterior motive, whether it is to steal money, information, or data, or to simply get away with
any crime by posing as someone else to frame someone to save oneself.
Frauds in the investment and insurance industries are also common. One might misuse
insurance to cash in money by using the name of someone dead as a nominee. Other common
insurance frauds might include fraudulent save oneself.
Frauds in the investment and insurance industries are also common. One might misuse
insurance to cash in money by using the name of someone dead as a nominee. Other common
insurance frauds might include fraudulent accidents and fabricated deaths to extract money
from the insurance company.
Plagiarism and citing information that is legally and ethically someone else's hard work is also
a form of fraud. Stealing intellectual property rights amount to the same level of crime as any
other fraud. Now that we have seen certain examples of fraud relevant to our lives, let us
understand the legal implications of this condemned crime.
Bank Fraud: Bank frauds are one of the most common frauds that we come across in the
world today. In this digital age, with the help of cyber-criminal tools like phishing, pharming,
malware, and spyware, it is easy to track one's online activities.
Asset Misappropriation
As the name suggests, asset misappropriation happens when an employee takes or misuses
company assets for their gain. This type of fraud can look like simple theft or abuse of
company goods or services. For instance, an employee uses company equipment for their
personal use even if they never actually steal it.
If the fraudster is clever, asset misappropriation can happen again and again until proper
controls, such as strong asset and inventory management, are put in place. A company doesn't
have to be large to be a victim.
Forgery
Forgery often appears as falsified business or financial records. An employee may create fake
records over time and use them to steal funds.
They may also falsify official badges or identification to steal property or goods.
Inventory Theft
Stealing goods for resale or personal use is known as inventory theft. Employees may
accomplish this by changing inventory records or claiming to have lost documentation and
receipts.
Account Fraud
Scammers can also come from outside a company. Business account fraud happens when a
hacker gains access to bank accounts through malware, fraudulent emails (also known as
business email compromise) or other means. They may try to make unauthorized purchases or
transfers before account credentials are changed.
Payroll Fraud
Embezzlement of company funds using the company payroll is called payroll fraud. An
employee can steal funds by way of falsified timesheets, issuing unauthorized bonuses, or
paying fictitious or terminated employees. Companies can even commit payroll fraud by
misclassifying their employees to the IRS.
Cash Theft
Also known as skimming, cash theft can occur a few dollars at time. This fraud is most
common in a business that deals with a lot of customer payments in cash, such as restaurants
and food carts. In some cases, a business owner will skim cash, since doing so reduces the
reported profitability of the business, and therefore its income tax liability.
Credit Card Scams
Businesses that hand out company credit cards for incidentals must keep a close eye on
receipts and statements. An employee might be tempted to swipe their company card for
something not related to their job. If they successfully submit an erroneous expense report,
they may continue the practice.
Business Email Compromise
Business email compromise is a type of phishing scam in which fraudsters try to hack, spoof
or impersonate business email addresses. They may change one letter or number in a familiar
email address to make their scam appear legitimate.
CAUSES OF FRAUD
Fraud can be caused by;
Opportunity
Here we talk about a weak system, lack of internal control in companies or industries. Also,
fraud can be due to the fact that someone can have a lot of power in an enterprise or maybe
the only one specialized in the accounting field because of that, the person can either under
value or over value some amounts.
Pressure/ Motivation
Pressure can be internally or externally.
Internal pressure deals with the mood of the person trying to live a life that he does not belong
to. Also it can be as a result of pressure from family issues.
External pressure may be as result of friends, negative passed example: A man having 10
girlfriends but earns a salary of 250000frs per month but decides to give 10000frs to each
girlfriend, knowing that 50000frs will remain for his house bill and nothing will remain for
him to feed, he will then be obliged to fraud in order to feed himself.
Rationalization
This is a process of carrying out an intentional act to justify your evil or doing something for
self-justification. Example: When someone takes money from a billionaire and having in
mind that he has too much, or when taking money from someone without him knowing due to
the fact that he is wicked or stingy