Corporate Fraud

Corporate fraud is any illegal act or deception committed by an organisation or

an individual on behalf of an organisation, for personal gain or to benefit the
organisation.

by YOKESH RAM S
Types of Corporate Fraud
1 Accounting Fraud
This involves manipulating
financial records to
misrepresent the financial
performance or position of a
company.
3 Corruption
This involves using power or
influence for personal gain or
to benefit a company, often
through bribery or extortion.
2 Insider Trading
This involves using
confidential information
about a company to profit
from buying or selling its
shares.
4 Tax Evasion
This involves deliberately
avoiding paying taxes owed
by a company or individual.
Accounting Fraud
Types of Accounting Fraud Consequences Examples

1. Earnings Management Severe financial penalties, imprisonment, Enron, WorldCom, and Satyam
2. Asset Misrepresentation reputational damage, and loss of investor Computer Services.
confidence.
3. Liability Misrepresentation
Insider Trading
Insider Information
An individual gains access to non-public information about a
company's performance.

Illegal Trading
They use this information to buy or sell shares of the company
before the information is made public.

Profit or Loss Avoidance

They profit from the price change or avoid potential losses.
Corruption
Bribery Embezzlement
Offering or accepting something Misappropriation of company
of value to influence a decision. funds for personal use.

Extortion
Using threats to force someone to give up something of value.
Tax Evasion
Hiding Income Failing to report all taxable
income.

Inflating Expenses Exaggerating business expenses

to reduce taxable income.

Using Tax Havens Shifting profits to countries with

low tax rates.
Consequences of Corporate Fraud
1 Financial Losses
Companies and investors lose significant sums of money due to fraudulent activities.

2 Reputational Damage
Fraudulent actions can severely damage a company's reputation, making it difficult to attract
investors and customers.

3 Legal Penalties
Companies and individuals involved in fraud face severe legal penalties, including fines and
imprisonment.

4 Erosion of Trust
Corporate fraud erodes trust in the financial markets and the business community.