Six Common Myths About Fraud, Essay Example

White-Collar Crime is a non-violent crime mostly performed by the people of the higher social class. The definition first appeared in the beginning of the 1930^th, as the corporate America started gaining its power. It is often also called fraud. White-Collar Crimes has a number of peculiarities: it comes from a generally legal activity, it is not violent, it also can be applied to a broad sphere of activities, such as banking, insurance claims, and accounting. This sort of criminal activity is hard to detect and punish, as the transactions involved in it look as legal, though their nature is fraudulent.

The article I have read traces six general myths that make it harder to detect White-Collar Crimes. These myths can be summarized as follows:

1. Most people will not commit fraud. This is definitely not true, as the people that have a chance to steal and remain undetected will likely do so. As soon as the person gains access to the finances of the enterprise the ideas of stealing appear.
2. Fraud is not material. In fact, minor frauds seldom remain small, as with time the person looses fear and starts stealing more. People can not stop cheating..
3. Most fraud goes undetected. Wrong again, as eventually the crime is uncovered – through internal audit, accident or co-workers’ report.
4. Fraud is well concealed. Few of the White-Collar Crimes are well-planned and organized; they are usually rather obvious and simple.
5. Auditor can not do better job detecting a fraud. White-Collar crimes always have a trace in the accounting documents, auditors are simply not suspicious or careful enough to check.
6. Prosecuting fraud deters others. This is also not quite so, as the people that choose to steal in large volumes usually think that they will not get caught, and those who actually fails to commit a White-Collar Crime s simply not smart enough.

Speaking about the scales and the costs of the White-Collar Crimes, the article provides reader with some shocking statistics: around $120 billion is being stolen each year by the white collars. An average bank robbery leaves a criminal with about $4000 of “net income”, while the well-planned fraud takes away as much as $200 000. This surely proves that White-Collar Crimes should be paid greater attention to.

References

Joseph T. Wells; “Six Common Myths about Fraud; If Not Debunked, They Can Obscure the Existence of White-Collar Crime” Journal of Accountancy, Vol. 169, 1990. Retrieved May 24, 2009 from: http://www.questia.com/read/5000112371?title=Six%20Common%20Myths%20about%20Fraud%3b%20If%20Not%20Debunked%2c%20They%20Can%20Obscure%20the%20Existence%20of%20White-Collar%20Crime