NCJ Number
61495
Journal
Assets Protection Volume: 4 Issue: 2 Dated: (MAY/JUNE 1979) Pages: 13-20
Date Published
1979
Length
8 pages
Annotation
MANAGEMENT FRAUD, THEFT AND DECEPTION BY MANAGERS, IS MORE OFTEN CONCEALED THAN REVEALED AND THERE IS AN URGENT NEED FOR SUCH FRAUD TO BE PLACED UNDER PUBLIC SCRUTINY.
Abstract
MANAGEMENT FRAUD ENCOMPASSES ALL FORMS OF DECEPTION PRACTICED BY MANAGERS TO BENEFIT THEMSELVES, AND CAN BE FOUND WHEREVER MANAGERS HAVE THE OPPORTUNITY AND NEED TO BETTER THEIR FINANCES OR STATUS THROUGH DECEPTION. MANAGERS' RESPECTED ROLES AS PROFIT CENTER LEADERS OFTEN MAKE THEM IMMUNE TO THE ORDINARY CHECKS AND BALANCES IMPOSED ON THEIR SUBORDINATES. THE FORMS MANAGEMENT FRAUD TAKES ARE DISCUSSED AND EXAMPLES ARE GIVEN. THESE INCLUDE OVERSTATEMENT OF INVENTORY, ACCEPTANCE OF INFERIOR GOODS, DELAY OF KEY EXPENDITURES, FICTITIOUS SALES, UNDERSTATEMENT OF LIABILITIES. DIFFERENT PRESSURES, INTERNAL OR EXTERNAL, CAN PUSH MANAGERS INTO DECEPTION. SOME OF THE REASONS BEHIND MANAGEMENT FRAUD ARE DISTORTION OF FACTS TO HOLD OFF DIVESTMENT; DECEPTION IN ORDER TO SURVIVE; DISTORTED PERFORMANCE TO WARRANT LARGER BONUSES; NEED TO SUCCEED. SYMPTOMS OF FRAUD VARY FROM NEGATIVE DEBIT MEMORANDA TO COMMISSIONS NOT IN LINE WITH INCREASED SALES. TO DETER FRAUD, EXECUTIVE MANAGEMENT MUST EMPHASIZE PUBLICLY THAT HONESTY IS COMPANY POLICY; RELY ON AN EXTERNAL AUDITOR FOR AUDITS; ESTABLISH AND SUPPORT A PROFESSIONAL INTERNAL AUDITING STAFF WHICH HAS ACCESS TO ALL OPERATIONS YET IS INDEPENDENT; AND, FINALLY, CALL IN EXPERTS AND TREAT THE FRAUD MATTER AS A BUSINESS, NOT A LEGAL, PROBLEM. (MJW)