Accounting crimes in a Corporation are committed by either the employees within the firm or by other external forces and the result is that large Corporations are affected and so are the large numbers of stockholders, etc. Of late there has been legislation that is trying to push for more severe penalties for these perpetrators of accounting crimes in a Corporation, though it is a fact that these crimes are now so highly technical that it is difficult to detect and apprehend the criminal.
What is a 'Corporate Crime'? Corporate Crime in essence is that type of crime that is indulged in by large Corporations for the benefit of the entire Corporation and for the detriment of others who do not belong to the corporation. A corporation may, for example, indulge in wrong marketing practices, and this would bring utmost benefit for the corporation. However, this is considered to be a crime. In the same way, a corporation can resale price maintenance, or indulge in the practice of exclusive dealing, or participate in deceptive manners of conduct, or create different business practices that are not acceptable by the general business population. These are all the different types of corrupt market practices and crimes that can be committed by large corporations.
There is another term that is used for such crimes; in fact, these terms are often interchangeable. This type of crime is known as 'white collar crime', and is conducted by an individual within the corporation, for the purpose of obtaining more personal gains. The senior officials of the corporation usually carry these out, and some of these crimes are that of embezzlement of sums of money, theft, frauds, and also the misuse of the property that belongs to the corporation. Why are all these crimes perpetrated? It is because of the large number of opportunities that are present within this type of set up that these crimes are carried out with ease, even though the perpetrators are very well aware of the fact that, if caught, the penalties would be extremely severe: they could be imprisoned or disqualified from their jobs, and in some cases, even disbarred from their chosen profession. (Corporate Crime Studies)
Sometimes, Corporate Crime is defined as the crimes that are committed by the corporation in the areas of environmental damage that causes loss of life or limb to the employees of the corporation and to any others who have been involved in its workings. When the corporation provides unsafe and unhealthy and unhygienic workplaces, then too it is committing a crime, because it is endangering the lives and the well being of its employees. Another crime committed by corporation is that of tax evasion, and this is a very serious crime indeed. This is a crime by which the accounts of the corporation are manipulated and covered up in such a way that all the benefit goes towards the corporation and somebody else is cheated out of the money that is rightfully theirs, like, for example, the government, which is cheated out of large sums of money every year by the crime of tax evasion that is committed by these corporations. Some corporations produce defective or dangerous merchandise and this is considered to be a crime, some corporations carry out frauds, and these include the crimes of price fixing, embezzlement, and of bribing. These are all bad and wrongful market practices, and can be severely penalized. (Corporate Crime, what is it?)
One particular Report on Corporate Crimes states that if the corporations had to pay their own way forward, they would have been instantly out of business. This is because of the fact that all large Corporations rely to a great extent on 'subsidies' from society. This way, these corporations manage to off load the costs of operation onto the society, and this means that though it may be profitable for a large number of stockholders of the company, as well as for some senor executives of the corporation, it would not be of any great benefit for the common man. This is because the varied costs incurred by the corporation, like for example, workplace injuries, pollution, certain corporate white collar crimes, and their costs, the employee discrimination factor, and so on, will have to be borne by Corporate America. Certain 'creative accounting' crimes are also part of this list of costs being borne by the others for the costs incurred by the corporations. (The Stakeholder Alliance)
An individual, who happens to belong to the business community, like for example, a public official, or an entrepreneur, or a professional businessman, on the other hand, commits a 'White Collar Crime'. Of late, this type of crime has been on the rise because of the changes in the stock market. Some of the most publicized white-collar crimes that have occurred in recent times are those of Enron, Adelphia, Kmart, and WorldCom, and the very infamous Xerox. Generally, a white-collar crime can be prosecuted in the state in which it was committed, and also in federal courts. It is a fact that white-collar crimes have changed over time; the more technically advanced we become; the more technically advanced these crimes are, and the more difficult it is to catch the criminals who are perpetrating them. Another factor that has contributed towards the improvement in the carrying out of the crime is the fact that the perpetrators are better educated today than they were even a few decades earlier. (White Collar Crime)
Therefore, the crimes committed are becoming extremely complex and difficult to apprehend, especially in the cases of accounting crimes, especially in certain areas like in telecommunications and in the software businesses. The Justice Department is of the opinion that the increase in the white collar crimes of accounting is because of the stress and the pressure that is put on the various companies to achieve their goals and their projections for the year which may be very high, and in order to meet the expectations of the seniors and the higher ups in the company, these crimes are committed. Security frauds and financial violations have in fact been increasing steadily over the years, and it is the truth that these crimes show an increase of more than double form the year 1997 to the year 2001. Some of the other and most commonly perpetrated white-collar crimes include the crimes of credit card frauds, insurance frauds, mail frauds and deceptions, government frauds, tax evasion, money laundering, receiving kickbacks, insider trading, public corruption, trade secret thefts, and so on.
While a credit card fraud entails the use of a credit card to purchase unauthorized merchandise, insurance fraud involves the crimes committed by the applicants of the insurance or by the claimants, or by the policy holders who inflate or 'pad' the amount of money to be claimed as insurance, and also fraudulently quote policies to obtain a higher rate of insurance, wrongfully. Money laundering is a crime by which the original and actual illegal income of an individual is hidden or concealed by illegal means so that detection would be impossible. The money is 'laundered' to make it appear to be legitimate and within legal bounds, and the criminal is able to enjoy the extra income thus generated, happily. Kickbacks are the sums of money that are paid to the buyer by the seller as a result of a previously made illegal agreement. Insider trading is that trading that takes place when those individuals who have been given special and confidential information about certain important events within the corporation sell this information to a buyer who would utilize this information for his own personal gain, and to the detriment of the company. The trading in a trade secret or the theft of a trade secret is another white-collar crime that involves corrupt market and business practices by a corporation. This type of crime is also known as 'economic espionage', and it involves the theft or seizure of an important economic or a trade secret from an individual who belongs to the company, or from a business, or from an industry. (White Collar Crime)
What is 'accounting' and what are the crimes that can be committed in this area? Accounting is basically the systematic recording and the reporting and the analysis of the various financial transactions of any business. (ADVFN Financial Glossary) Accounting is also known as a function, that in both private sectors as well as in public sectors allows the owners or the managers or whoever is concerned to view the financial transactions of the company as and when they desire to do so. (Accounting definition) It has been stated that there is at present a spate in the number of accounting crimes and crimes in corporations, like for example, in Enron, WorldCom, and in Adelphia. Tried and tested methods of perpetrating the crimes were used, and the rest of the world came to know what exactly a financial fraud is,…