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Mariefe Harllee
Mrs. Amanda Amstutz
Fraud in Accounting
In Accounting, there have been many reports of
fraud that occur in the field. The topic area I will be
discussing will pertain to fraud and my focused
researched question is, What are the most common
root causes of fraud in the Accounting field that occur
in larger corporate companies? I chose to research the topic of fraud because it is one of my
goals to obtain my Certified Fraud Examiner (CFE) certifications. My hypothesis as to why this
occurs is because an individual(s) has monopoly overseeing all aspects of the financial reports,
thus misusing this power.
Once the subject and purpose has been determined, I began collecting information. I used
the Internet to search for information about instances on fraud that have occurred in the past,
how it affected the company, and how it occurred and possibly could have been prevented. I
relied heavily on articles from the past about large corporate companies where fraud has
occurred and then narrowed it down to the most common issues.
The history of fraud in Accounting can be simply traced back to theft. Although theft
occurs on many different levels, it is the oldest crime in our history. Over the years, people
continually acquire goods and property that do not belong to them. This normally occurs because

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of personal financial difficulties. Fraud is considered a crime, and opinions on fraud are uniform
in the sense that the individual(s) who committed such act should be held responsible.
Fraud is without a doubt the paramount issue facing the Accounting field. Accountants
who commit fraud are no different than police officers who work with the mafia, for example. It
is our duties, both professionally and morally, to ensure that businesses are being run in an
honest manner, and any act of fraud is in direct opposition of that mission.
The U.S. Securities Exchange and Commission has appointed a team specifically known
as the Financial Reporting and Audit Task Force to prosecute those who violate laws pertaining
to reporting and auditing. With a rising amount of fraudulent activities occurring throughout the
world, there are more laws that are being set in place regarding how a company should fill out
legers, summary reports, etc. and for punishment as well. Also, distributing such tasks to a group
rather than a single accountant works to broaden responsibility and works to eliminate the
likelihood of fraud being committed.
The distinction between a simple mistake on a report and actual fraud boils down to
intent. Mistakes, unfortunately, still costs a company, but not as much as actual fraud does. On
September 19, 2013, Andrew Ceresny, Co-director of Division of Enforcement for the U.S.
Securities and Exchange Commission, made a speech about the financial crisis that caused a loss
for many investors. He then proceeded to talk about the Fraud Task Force saying, Ultimately,
the task force demonstrates our renewed commitment to prosecute those who betray trust of the
public markets (Financial Reporting and Accounting, 2013). This group of people charged
notorious individuals for fraud, which caused a huge plummet in the public markets. As you can
see, fraud affects all in the business industry from small companies to public sectors, and so on.

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According to, a
Houston-based, publicly traded waste
management company reported $1.7 billion in
fake earnings and the main culprits were Dean L.
Buntrock (Founder/CEO) and the top executives
and Arthur Andersen Company (auditors). This
scandal occurred in 1998. The company
allegedly falsely increased the depreciation time length for their property, plant, and equipment
on the balance sheets. They were finally caught when a new CEO discovered the false reports in
the books. These facts are all shown the picture provided.
Another notorious example of fraud occurred from Enron. This Houston-based company
filed for bankruptcy, resulting in shareholders losing $74 billion. Also, thousands of employees
lost their retirement accounts and many lost their
jobs. CEO Jeff Skilling and Ken Lay were the
master minds behind this devastating scandal,
which caused distress for so many individuals and
their families. They kept huge debts off the balance
sheets, and used this to their financial advantage.
Similar to the waste management scandal (pictured to the right), Arthur Andersen Company was
also found guilty for doctoring the documents. According to, By
misrepresenting earning reports while continuing to enjoy the revenue provided by the investors
not privy to the true financial condition of Enron, the executives of Enron embezzled funds
funneling in from investments while reporting fraudulent earnings to those investors

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My focused research question is, What are the most common root causes of fraud in the
Accounting field that occur in larger corporate companies? My findings support my hypothesis,
which stated that it was because an individual(s) has monopoly overseeing financial documents
and falsely doctored the reports for financial gain. I would recommend that companies distribute
accounting tasks to a group of individuals, rather than just one person. This can eliminate
monopoly that is present in the company. Another recommendation is to have a credible outside
company come in and check audit the accuracy of these reports frequently, maybe quarterly. The
last recommendation I have to fix this issue is to set up an anonymous hotline that allows
individuals to call in and report suspicions.

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Works Cited
[Enron Scandal]. (n.d.). Retrieved from
Finance. (n.d.). Retrieved March 8, 2016, from
[Fraud Corporate Companies]. (n.d.). Retrieved March 21, 2016, from
Speech. (n.d.). Retrieved March 9, 2016, from
The 10 Worst Accounting Scandals of All Time. (n.d.). Retrieved March 9, 2016, from
[Waste Management Scandal 1998]. (n.d.). Retrieved March 21, 2016, from

What are some of the general concepts you learned from this
sequence? For Project #2, I learned the different types of analytical reports and its
importance. For this sequence, we concentrated more on research reports. I learned how to
properly format a research report using the IMRaD method- Introduction, Methodology, Results,
Graphics, Discussion, and Conclusion. Most importantly, I enjoyed using these concepts to apply
into my field of study.
What activities/assignments did we do/have that helped address the
concepts we learned? In Week 7, we were asked to read Chapter 10 which was about
analytic reports. We concentrated specifically on research reports for this sequence. The readings
included a detailed example of a research report, which was extremely helpful in organizing the
format of the paper. After the readings, we made discussion posts and journal entries. In Week 8,
after choosing our research topic and identifying our research question, we were asked to outline
our research methods. After outlining the research methods comes the research. The journal entry
for Week 9 asked us to make a conclusion and also include suggestions on how to fix the issue.

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What was the project about and how did you complete it? My Project #2
is about fraud that occurs in the Accounting field. It is a very common issue that causes drastic
outcomes for the company and even affects individuals who work for the company. After
identifying the purpose of my research report, I used the Internet to obtain information. The most
helpful resource I found were news/journal articles about fraud that have occurred in the past.
Include a discussion of your topic, why you chose it, and what you
discovered/learned. The topic I chose was fraud that occurs in the Accountng field and
my specific research question was, "What are the most common root causes of fraud in the
Accounting field that occur in larger corporate companies?" I chose this topic because it is one of
my goals to obtain my Certified Fraud Examiner license. It is interesting to me how much
companies are affected when fraud occurs due to intentionally faltering documents.
Define each of the student learning outcomes in your own words