Case 3 Payroll Fraud

1.The tone at the top is how the upper managements commitment and leadership is towards honesty, integrity and ethical behavior. I feel the tone at the top is important in deterring expense account fraud. In any organization it’s important to have control over your environment and set the tone for others. If you want a place where you implement integrity you have to give integrity. If the tone upholds ethics, honesty and integrity then the employees will carry theses same core values. However, if upper management is committing fraud it will so employees that it is ok to do unethical practices as well. Management has to be a leader for their organization and create a mission and a vision, without that there is no foundation.

2.Some common types of expense account fraud employees commit are payroll fraud, using business money for your personal expenses and

pocketing gifts for the organization for yourself.

I believe that they might not believe that they’re doing anything wrong when it comes to payroll fraud because they will believe that upper management doesn’t look at what they’re doing because they trust them. Also, the will believe that since they have been doing payroll fraud for so long that no one would notice if they haven’t caught them yet, so they will continue to do it. Pocketing/spending money for personal use is another expense fraud employees’ commit because they have easy access to the money and spend how much they want. I feel that in this case an individual will do it a couple of times to see if they get caught, if not, the get swipe happy and buy what they want. They don’t feel as if this as bad as other organizational fraud because it’s only small amounts at a time not realizing after a while it adds up

tremendously. Pocketing gifts made for the organization for yourself is another type of fraud I believe people do because they feel it’s not as bad as other organizational fraud. Pocketing gifts from an organization for an organization is one I believe to be the worst. I say this because I feel that individuals do this because in their mind they are probably thinking “if the organization never sees it, how would they ever know?” this is my opinion is so unethical! I understand that some individuals feel that they’re entitled to such gifts because of their hard work, but it doesn’t make it right! I feel that this is the easiest fraud for one to do. Especially, if the gift was given to the person personally for the organization.

3.Some things that an organization can to do to prevent expense fraud would be to have all policies and procedures written in clear and plain language, reinforce policies and procedures frequently, and always be accessible to employees at all levels. Having clear and precise policies and procedures will cut back on an employee stating” that was never in the policy” or “no one said that’s what my job consisted of”. This could also help them personally because as soon as the join the organization they know what is expected of them and their job. Reinforcing policies and procedures frequently will help employees understand the policies and procedures clearly. There will not be and breakdown in communication between the employees and the employers. Being accessible for employees at all times will make them feel a part of the organization. Any organization should lead by example, communicate the ethics and values to their employees at any given time and reward integrity. By doing this they will apply the core values to the organization and will not even think about committing fraud at your organization.