Monday, October 25, 2010

Reasons for Managers to Commit Fraud

1. Incompetent managers may deceive to survive. Good manager keep abreast of change. In Mr Knowsome case there is computerised inventory control system that is not yet been installed by him because he believes that this would only increase his workload.

2. Profit centre may distort facts to hold off divestment. Mr Knowsome is three months late with his monthly reports. It can be that he is trying to distort financial figures in order to retain his position.

3. Performance may be distorted to warrant lager bonuses. It is also known that Mr Knowsome is working a lot of overtime to keep the creditors system, the bank reconciliation and inventory system of the branch up to date, despite sufficient stuff.

4. The need to succeed can turn manager to deception. When ambition and self-advancement are more important than solid accomplishment, some mangers will betray the stewardship pf the resources entrusted to them.

5. Profits may be inflated to obtain advantages in the marketplace. The financial officers who want their organisation’s stock to make a splash in the market to cash in stock options, or seek to obtain unwarranted credit lines, may inflate profits unfairly.

6. Organisations publicise estimates of future sales level, marker share, income and stock performance to the financial market. When any of these performance measures cannot be reached, aggressive accounting is in use to achieve the required result.

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