Fraud Ethics Fraud in the United States:

Fraud Ethics Fraud in the United States: An overview Fraud has always existed in the United States, but a number of systemic changes in the way that business is handled have caused fraud to become more common than ever before, in both private industry and government. For example, according to the ACFE (Association of Certified Fraud Examiners) magazine Fraud, "the rise in contract management and the outsourcing of goods and services has created an increase in procurement fraud" (Piper 2012).

Theoretically, when making awards the main considerations should be the quality of the work of the firm to which the labor is outsourced and the price. However, at one company, during the bidding process, "all the reputable contractors" had been given low ratings, except one new company, to which the new contract was awarded "at double the price.. [said the investigator] 'I later learned the bid evaluators were friends with the contractor.

The winning bidder actually had offered a bid evaluator a job with the company during the bid evaluation process'" (Piper 2012). When such fraud occurs in government, not only are the rejected, honest contractors hurt -- so are the taxpayers, as they must support the additional unnecessary costs of the final project. And even fraud in private industry increases the costs of goods and services for the consumer.

The proliferation of contracted services increases the number of transactions to which the organization is connected and thus increases the chances that fraud may occur. "If contractors or non-employees have access to processes, audit staff should assess what frauds they could be committing. Lack of daily oversight and control and lack of their definitive reporting structures to the company could keep these non-employees out of sight and out of mind" (Hubbs 2012).

Fraud takes place on an international level, and in the new global economy, it can be difficult for American companies not to be drawn into the web of misappropriation. For example, one of the most common internationally-based crimes is money laundering. "The International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, mandates financial institutions to comply with a series of anti-laundering measures including but not limited to the implementation of anti-money laundering (AML) programs and transparent financial reporting" (Mundie 2012).

However, not all state regulations are in harmony with federal regulations, and states such as Delaware that have relatively lax regulations have been havens for launderers. "Delaware corporations can be used to hold assets in the U.S. with an effective tax rate of zero, as long as the majority of directors (not shareholders) are non-U.S. persons" (Mundie 2012). Also because of globalization, the more that U.S.

companies do business with developing world nations where nonexistent ethical standards, bribery and corruption is a way of life, the more the companies find themselves unwittingly implicated in fraudulent schemes. "The dramatic resurgence of corruption and widespread fraud" in China, for example, has caused many U.S. firms to run "afoul of international anti-bribery laws" (Humphrey 2012). Even a company committed to high ethical standards may find itself implicated because of bad behavior of subcontractors who are just doing 'business as usual' by their nation's ethical standards.

Often, the more complex the organization, the easier it is to hide the fraud, but fraud can occur within any entity. Sometimes a lack of automation can actually lead to more fraud, given that "manual processes may allow for employees' manipulation" (Hubbs.