FRAUD
controls were bypassed , or overridden by management , the frequency and magnitude of fraud becomes significantly higher .
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Management override of controls is a critical issue because it makes even the most well-designed control systems ineffective . Management override occurs when senior executives bypass established controls for personal reasons and when they bypass the controls , they may not only commit fraud but also create a culture where such behaviours become normalized . This kind of fraud is incredibly challenging to detect because it involves individuals with the authority to influence or change procedures for personal gain or to meet unrealistic business targets . In this context , the “ tone at the top ” set by leadership is crucial . When leaders prioritize and demonstrate ethical behaviour , they establish a standard for the entire organization that discourages fraudulent activity . The leadership tone directly shapes organizational culture and influences employee behaviour , reinforcing the importance of controls and ethical behaviour .
The ACFE ' s analysis serves as a reminder for organizations to reassess and strengthen their internal control systems . It emphasizes the importance of regular audits , ethical culture , employee education and the need for proactive actions in fraud prevention , where understanding the trends and patterns of fraud can help to stay ahead of potential threats .
To understand the trends in 2023 , let ’ s look at the 3 news stories which are Bernie Ecclestone fraud case , the fall of FTX and the Wirecard scandal involving CFO , Burkhard Ley .
Case Studies from 2023 Bernie Ecclestone , the former Formula One executive , pleaded guilty to a £ 400 million fraud allegation linked to the
failure to declare overseas assets held in a trust in Singapore ( 2 ). Ecclestone ' s history of legal issues , including a £ 10 million settlement with UK tax authorities in 2008 and a bribery allegation in 2013 raises critical questions about regulatory effectiveness and ethical behaviour and culture .
Fall of FTX is a bit different than the traditional occupational fraud cases and took us the emerging industries of cryptocurrency . In 2023 , the founder of FTX , Sam Bankman-Fried , was found guilty on seven counts of wire fraud , conspiracy , and money laundering . This once-celebrated cryptocurrency mogul was accused of stealing nearly $ 10 billion from FTX customers to finance political contributions , venture capital investments , and other extravagances ( 3 ).
Another case that hit the headlines in 2023 was about Wirecard , which is a German payment processor , which collapsed following the scandal revealed in 2020 . The scandal exposed that a massive portion of Wirecard ' s profits and assets were fictitious . Wirecard admitted that € 1.9 billion , which supposedly existed in trustee accounts in the Philippines , did not exist . The revelation of the missing funds led to a dramatic collapse in company ’ s stock price . The executives were accused of artificially inflating balance sheet and revenue to