- Control fraud
Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation or state uses their powers to subvert the organization and to engage in extensive fraud for personal gain.
The concept of control fraud is based on the observation that the CEO of a company is uniquely placed to remove the checks and balances on fraud within a company, such as through the use of selective hiring. These tactics can position the executive in a way that allows him or her to engage in accountancy fraud and embezzle money, hide shortfalls or otherwise defraud investors, shareholders, or the public at large. An example would be when a company publishes accounts showing massive profits, whereas in reality it is insolvent. This will cause the stock to rise beyond its actual value, and those exercising the control fraud will cash in their stocks before the reality is known by others. Additionally, companies can lobby for changes in the law to weaken regulation, and this can extend the fraud.
Control fraud can also occur in a political situation, for example by the leader of a country who can use their position to embezzle public funds and turn the country into a kleptocracy.
Control fraud, a term coined by William K. Black, refers to the fraud or the person perpetrating the fraud.
- Schneier on Security: Control fraud
- When Fragile becomes Friable: Endemic Control Fraud as a Cause of Economic Stagnation and Collapse- William K. Black
- Bill Moyer's journal: William K. Black: CSI Bailout
- Executive Compensation and Earnings Management under Moral Hazard, Bo Sun
- Bill Black testifies re: Lehman Brothers
Wikimedia Foundation. 2010.
Look at other dictionaries:
Fraud deterrence — has gained public recognition and spotlight since the 2002 inception of the Sarbanes Oxley Act. Of the many reforms enacted through Sarbanes Oxley, one major goal was to regain public confidence in the reliability of financial markets in the wake … Wikipedia
Control Risk — Control Risk, in auditing, is the risk that a company s internal controls are insufficient to mitigate or detect errors or fraud.ee also*Risk Assessment *Inherent risk *Detection Risk … Wikipedia
Fraud — Criminal law Part of … Wikipedia
Detective Control — A type of internal control mechanism intended to find problems within a company s processes. Detective control may be employed in accordance with many different goals, such as quality control, fraud prevention and legal compliance. In small firms … Investment dictionary
Data Analysis Techniques for Fraud Detection — Fraud is a million dollar business and it is increasing every year. The PwC global economic crime survey of 2009 suggests that close to 30% of companies worldwide reported fallen victim to fraud in the past year Fraud involves one or more… … Wikipedia
Internal control — In accounting and organizational theory, Internal control is defined as a process effected by an organization s structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific… … Wikipedia
Insurance fraud — Criminal law Part … Wikipedia
Phone fraud — Whether in the form of the consumer attempting to defraud the telephone company, the telephone company attempting to defraud the consumer, or a third party attempting to defraud either of them, fraud has been a part of the telephone system almost … Wikipedia
Electoral fraud — Articleissues|article=y cleanup=January 2008 wikify=January 2008Electoral fraud is illegal interference with the process of an election. Acts of fraud tend to involve affecting vote counts to bring about a desired election outcome, whether by… … Wikipedia
Birth control sabotage — Birth control sabotage, or reproductive coercion, refers to efforts to manipulate another person s use of birth control or to undermine efforts to prevent an unwanted pregnancy. Examples include replacing birth control pills with fakes,… … Wikipedia