Identify A Case Of Corporate Fraud By Finding A Curre 533801

Identify A Case Of Corporate Fraud By Finding A Current Event Or By Re

Identify a case of corporate fraud by finding a current event or by researching historical cases. After finding a case, complete the following in your initial discussion post: Briefly summarize the case, including what happened, who was involved, and what damages were incurred. Note how the fraud was detected and discuss any red flags that appeared prior to detection. Could an accounting and finance system have helped deter this fraud? If yes, how? If no, why not? Are there any specific business policies and procedures that could have been in place that would have prevented the fraud from occurring? Explain. Embed course material concepts, principles, and theories, which require supporting citations along with at least two scholarly peer reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.

Paper For Above instruction

Corporate fraud represents a significant threat to the integrity and stability of financial markets, eroding investor confidence and leading to substantial economic damages. The case of the Enron scandal, one of the most notorious instances of corporate fraud in history, exemplifies how unethical practices, coupled with weak oversight, can lead to devastating consequences. Enron, an American energy company, engaged in widespread accounting fraud to inflate its profits and hide its liabilities, ultimately leading to its bankruptcy in 2001 (Healy & Palepu, 2003). This case involved top executives and accounting firms, notably Arthur Andersen, whose collaboration masked the company's financial discrepancies. The damages incurred included thousands of employees losing their jobs and savings, investors suffering billions of dollars in losses, and a severe blow to public trust in corporate governance.

Fraud detection in the Enron case was initially triggered by whistleblower revelations and discrepancies identified during financial audits. Red flags included inconsistent financial statements, unexplained complex corporate structures, and suspicious accounting practices such as mark-to-market accounting (Healy & Palepu, 2003). Prior to detection, these anomalies might have been obscured by overly complex financial reporting systems and a lack of stringent internal controls. An advanced accounting and finance system, integrating real-time data analytics and anomaly detection algorithms, could potentially have identified suspicious patterns earlier, acting as a deterrent to fraudulent activities (Kokina & Davenport, 2017). Such systems enable proactive oversight and quicker identification of irregularities, limiting fraudulent opportunities.

In addition to technological solutions, robust internal policies and procedures are crucial. Implementing strong ethical standards, comprehensive whistleblowing policies, and regular audits could have fostered a culture of integrity. Segregation of duties and mandatory approval processes for significant transactions also serve as effective internal controls. For instance, Enron's failure to establish adequate oversight and internal checks facilitated the fraud. Establishing a code of ethics aligned with corporate governance best practices, training employees on ethical standards, and maintaining independent audit committees could have mitigated the risk of fraud (Cressey, 1953; Albrecht et al., 2015).

References

• Albrecht, W. S., Albrecht, C. C., Albrecht, C. O., & Zimbelman, M. F. (2015). Fraud examination. Cengage Learning.
• Cressey, D. R. (1953). Other people's money: A study in the social psychology of embezzlement. Free Press.
• Healy, P. M., & Palepu, K. G. (2003). The Fall of Enron. Journal of Economic Perspectives, 17(2), 3-26.
• Kokina, J., & Davenport, T. H. (2017). The potential for artificial intelligence and machine learning in accounting. Journal of Emerging Technologies in Accounting, 14(1), 115-122.