Forensics

1. UGBA 127-5; Homework Antonia FICOVA
Haas School of Business, 24116680
UC Berkeley; 2012
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3.1 Describe occupational fraud and abuse.
imply definition of this term provided Kranacher, Riley, Wells (2011, 60) and means
the use of one´s occupation for personal enrichment through the deliberate misuse or
misapplication of the employing organization´s resources or assets. Moreover, fraud and
abuse involves a wide variety of conduct by executives, employees, managers. Elements of
these scheme has been identified by the Association of Certified Fraud Examiners as follows:
activity is clandestine, violates the employee´s fiduciary duties to the organizattion, purpose
of financial benefit, costs of employing organization assets, revenues, reserves.
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3.6 Explain the relationship between an employee´s position and the level of theft
(according to the Hollinger and Clark´s research).
esults coming out from their hypothesis show that employees steal primarily as a result
of workplace conditions. Moreover, with thefts being highest in jobs with greater
access to the things of value in the organization for example retail cashiers with daily access
to cash had the highest incidence with theft. They also concluded that the true costs of
employee theft are vastly understated according to the Kranacher, Riley, Wells (2011, 71, 74).
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3.7 Analyze the role of corporate governance mechanisms in fraud prevention.
ollinger and Clark in their study of control and deviance pointed out that exist five
different control mechanisms as follows: compay policy, selection of personnel,
inventory control, security and punishment. Their data indicated that the impact of
organizational controls is neither uniform nor very strong. In short, formal organizational
controls do negatively influence theft prevalence, but these effects must be understood in
combination with the other factors influencing this phenomenon as is described in Kranacher,
Riley, Wells (2011, 74-5).
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4.2 Explain why collusion poses unique prevention and detection challenges.
he important point of collusion is that may be among individuals within an
organization, individuals across organizations and multiple organizations. Moreover,
fraud losses increase dramatically when collusion is involved, especially when losses are
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2. UGBA 127-5; Homework Antonia FICOVA
Haas School of Business, 24116680
UC Berkeley; 2012
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caused by individual predators that work with others. However, when collusion is involved
internal
control are generally ineffective in preventing fraud and other financial crimes. Consequently,
internal controls can not prevent collusive fraud and financial crimes as highlighted
Kranacher, Riley, Wells (2011, 88).
4.4 Explain the difference between „following the money“ and „tracing money“.
racing and following1
are both exercises in locating assets which are or may be taken to
represent an asset belonging to the plaintiffs and to which they assert ownership. The
processes of following and tracing are, however, distinct what is explained as follows:
Following is the process of following the same asset as it moves from hand to hand and
Tracing is the process of identifying a new asset as the substitute for the old. On the other
hand, tracing is also distinct from claiming. It identifies the traceable proceeds of the
claimant’s property so it enables the claimant to substitute the traceable proceeds for the
original asset as the subject matter of his claim.
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4.8 Identify and describe the different types of banks.
ranacher, Riley, Wells (2011, 101) presented that investigators may run across a
number of different type of banks including following banks. Commercial banks are
institutions which accepts deposits, makes business loans, and offers related services. Federal
savings banks are also known as savings and loan banks. Offshore banks2
are located outside
the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that
provides financial and legal advantages. Private banks are owned by either an individual or a
general partner(s) with limited partner(s) to facilitate transactions. Central banks, like U.S.
Federal Reserve, CEO is Bernanke, are responsible for maintaining and protecting the country
´s currency, especially interest rate. We also know another type of banks such as
correspondent, cyber banks, bank holding companies, securities brokerages. In sum, when
business competing internationally will usually require international banking services.
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1
Ch. Mitchell, "Tracing, following, and claiming the proceeds of stolen assets", The Jersey Law Review -
February 2003, available at:
http://www.jerseylaw.je/publications/jerseylawreview/feb03/jlr0302_mitchell.aspx#_ftnref8, July 18, 2012
2
Note: Offshore centres including following countries: Bahamas, Barbados, British Virgin Islands, Cayman
Islands, Cook Islands.
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3. UGBA 127-5; Homework Antonia FICOVA
Haas School of Business, 24116680
UC Berkeley; 2012
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