Corruption Schemes, Control Environment and Fraud Prevention
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Describe the different types of corruption schemes
Explain how anti-fraud controls differ between large organizations and small organizations
Explain how the control environment helps to minimize the loss from fraud?
Are there ways to prevent fraud completely?
Types of Corruption Schemes
In a corruption scheme, an employee misuses his or her influence in a business transaction in a way that violates his or her duty to the employer in order to gain a direct or indirect benefit ("Report to the nations...", 2012).
There are four main types of corruption schemes-
Bribery is used by external parties to take undue advantage over others with the help of an employee who is corrupt. Bribery is a process of giving something to the decision making for facilitating the decision in one's favor. The aim of bribery is to get something done which otherwise might not be possible, like getting a contract or to obtain insider information.
A kickback happens when the company pays more to vendor for goods and services and vendor pays a part of the payment to the perpetrator. Anyone who has authority to award contract or purchase products or services on behalf of company can engage in kickback scheme.
3. Conflicts of Interest
Conflict of interest is a situation where an employee, manager or any other company executive has an economic or personal interest in a transaction that can have negative impact on the company.
4. Illegal Gratuity
If an employee helps a vendor obtain a big contract from the company and in return accepts a luxury car, it would be an example of illegal ...
The document lists types of corruption schemes and explains them. Role of control environment in fraud prevention is also analyzed.