Essay on Government Fraud Reading

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According to Pamela Murphy, what are the six categories of rationalization of unethical behaviour? 1. Pleading ignorance
∙ ignore the consequence of a wrongful act
∙ eg. you have given up on a task because you don’t have enough time to finish it, and believe that the manager will forgive you this time real life eg: Enron and all its executives made billions of money from accounting fraud, but they ignored huge consequences after people would find out the truth. 2.

Shifting the blame
∙ Blame others and make them responsible for what you did
∙ Eg. Late for the meeting because everyone else is also late. eg. even the Arthur Anderson firm he

3.

Advantageous comparison
∙ Compare something you did wrong with another more severe wrongful act
∙ Eg. You can’t fire me just because I forgot to send the report on time. This is nothing compared to my manager who even overslept and missed the annual meeting. 4. Moral Justification
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try to justify a wrongful act actually has a moral purpose eg. Making false financial statements was for benefit employees within the firm rather than board of directors. By making false financial statements, the firm is able to attract more investors. This way, we are able to give more benefits for our employees, instead of going into the pockets of these board of directors. 5. Euphemistic labeling eg.I have no choice but to make this accounting fraud in order to keep my company from bankruptcy, or else all my employees would lose jobs and blame the fault on me.

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Victim takes the fall eg. • How prevalent is fraud?
In fact, PricewaterhouseCoopers(Trading as PwC)’s 2009 Global Economic Survey shows that 56% of
Canadian companies surveyed reported being victims of economic crime during 2009. Among them, 24$ estimated their direct fraud­related losses to be greater than US $500,000.
“For many private companies, fraud equals big money lost,” says MacGregor. “But it goes beyond dollars lost. Fraud can also negatively impact employee morale, business relations, brand, and company reputation.
Companies also risk losing their customer base―not to mention the time and expense of undergoing an investigation.” “For many private companies, fraud equals big money lost,” says MacGregor. “But it goes beyond dollars lost. Fraud can also negatively impact employee morale, business relations, brand, and company reputation.
Companies also risk losing their customer base―not to mention the time and expense of undergoing an investigation.” • What is the “fraud triangle”?
Three conditions that must be in place in order to commit fraud: opportunity, motive, and rationale. Most people who commit fraud at work are not career criminals and often are trusted staff with no criminal history. The famed criminologist Donald R. Cressey says there are three factors that must be present for an ordinary person to commit fraud. They are Motivation, Rationalization, and Opportunity. Cressey calls it the
Fraud Triangle.

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Motivation or pressure may include financial problems, addictions like gambling, shopping or drugs, pressure to show good performance or results, or just the thrill of being able to get away with something. ●

Rationalization is when individuals think they are justified because they are underpaid, or it's for their family, or they need it now but they'll pay it back before anyone notices.

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Opportunity is created when there are weaknesses in controls. Individuals think they won't get caught because nobody is looking, or reviewing, or performing reconciliations and reviews.

• What data does Murphy use in her studies. What are some of her findings?

13. “We like to think we’d never commit fraud 
 •According to Pamela Murphy, what are the six categories of rationalization of unethical behaviour?


1.

Pleading ignorance

2. Shifting
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