Experts present on fraud

Calahan Steed, Journalist

Students at UW-Whitewater face ethical dilemmas every day. Cheating on homework, not paying parking tickets and lying are just a few that students face. Those dilemmas, however, are also faced in the professional world.

On Tuesday, Feb. 4, two professionals from the accounting field presented to students about fraud. Marty Mathias and Mandy Paskey described the three different stages of fraud consisting of financial statement fraud, corruption, and asset misappropriation. Financial statement fraud consists of overstatements, corruption involves cheating with two or more people and asset misappropriation involves stealing.

According to the 2018 Report of the Nations on Occupational Fraud and Abuse, there is a 5 percent loss in revenue for companies because of fraud. Marty Mathias expressed concern at how much money companies were losing.

“Sales tax is about 5 percent and then you add the 5 percent of fraud and that’s a lot of money being lost.”

The 2018 Report of the Nations also stated that there was a median loss of $130,000 in the United States. Internationally, the amount of lost revenue is almost about $4 trillion. Companies in 125 different countries were busted for fraud from the report.

Mandy Paskey, an auditor, described what job positions are most likely going to commit fraud. The accounting department of a company is responsible for 14% of fraud cases.

However, the executive management branch is responsible for 11% of fraud. Those cases cost companies $729,000 in revenue. Paskey says management faces an ethical dilemma when their boss gives them an order to write a check.

“Are you going to tell your boss no?”

Companies aren’t just writing big checks for themselves, some companies have found creative ways to commit fraud. Mathias described a situation he encountered involving a non-profit.

The non-profit was going to get a new company car, but it would only allow a $20,000 transaction. However, the executive wanted a car that was worth $25,000 because it included GPS and satellite. So the executive split the transaction to write a check for $15,000 and $10,000 to get the new car.

These non-profits and other companies get busted because of tips given to auditors. Tips account for 40% of the reason why companies get busted. People hear about corruption and pass forth the information.

Senior Ben Wolfe, a Finance major with an emphasis in financial planning, believes people working in the company can help stop fraud by speaking out.

“People can stop it in the company by being vigilant and acting if they see something that doesn’t add up or seems fishy,” said Wolfe.

Also, Wolfe thinks that holding more people responsible will help limit the chances of fraud happening in a company.

“Companies can stop it by making people with the opportunity to create fraud personally responsible if fraud happens within the scope of their job,” he said.

The 2018 Report of the Nations also states that criminal fraud referrals are declining. The report states, “Over the past 10 years, the percentage of occupational frauds referred to law enforcement has declined by 16 percent.”

Students at UW-Whitewater face hard ethical decisions every day and they will face them in the professional field as well.