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Forensic Accounting Chapter 5

5 forensic accounting 80 doctored sales figures

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Unformatted text preview: ance 6. Bogus claims. (auto, health, and workers comp) comp) 7. Overstated refunds Overstated or bogus refund requests. requests. 8. Fictitious expense Fictitious reimbursement schemes. schemes. 9. Multiple Multiple reimbursement Note: Reference List Textbookequests. Note: requests. r Section 5061 1. Multiple payments to 1. Multiple the same payee. the 2. Multiple payees for Multiple the same product or service. service. 3. Ghosts Employee – persons on payroll persons that do not show up for work at the company. company. 4. Inflated invoices. 5. Shell companies. Chapter 5 Forensic Accounting 82 Price Manipulations Land Flipping A company wants to purchase some land. purchase A person of trust uses inside person information to purchase the land. He than sells the land back to his company at an inflated price price Chapter 5 Forensic Accounting 83 Price Manipulations Pump ‘n Dump manipulate the Dump A technique used to price of thinly traded stock commonly called “penny stock” or “pink sheet stock” The fraudsters hype the stock with bogus press releases and misleading information. information. Once the stock prices reaches a high Once level the fraudsters quickly sell their entire position realizing a huge profit and leaving the “victim investor” with nothing. Chapter 5 Forensic Accounting 84 Price Manipulations Cybersmear price of a Cybersmear technique used to drive the A stock down, that the fraudster are selling short. The fraudsters smash / smear the stock with bogus press releases and misleading information. misleading The bad news will cause the stock price The to fall allowing the fraudster to cover the short position resulting in the realization of a huge profit. Chapter 5 Forensic Accounting 85 Price Manipulations Money Laundering Laundering A technique used to disguise the true nature and source of the funds. There are 3 Stages of Money Laundering are •Placement –The introduction of the money The into the financial system. into •Layering -A series of transactions that series conceal the owner of the money, where the money came from and will discourage law enforcement. enforcement. •Integration - Receiving the money back with Integration Chapter 5 appearance of beingForensic Accounting legitimate. appearance 86 Price Manipulations Bid Rigging Rigging This occurs when a vendor is given extra information that creates an unfair advantage in an open competitive sealed bid procurement. bid Often rigging schemes include giving Often the employees with inside information kickbacks, bribes, or other forms of compensation in return for this “extra information.” Chapter 5 Forensic Accounting 87 How is Bid Rigging Caught ? Rotation of Purchasing Agents Rotation Policies Prohibiting Gifts From Policies Vendors Vendors Mandate a Cone of Silence During: The Solicitation Bid Evaluation Contract Negotiations The Pre-Award Chapter 5 Forensic Accounting 88 Fraud Detection Fraud Programs Note: Reference Textbook Section 5071 Chapter 5 Chapter F...
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