Kolluru N. Rao - A Hand Book on Frauds

Copyright 2019, Kolluru N Rao
All rights reserved.

No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a magazine, newspaper or broadcast.

Published in India by Prowess Publishing,
YRK Towers, Thadikara Swamy Koil St, Alandur,
Chennai, Tamil Nadu 600016

ISBN: 978-93-89097-90-0
eISBN: 978-93-89097-91-7

Library of Congress Cataloging in Publication

INSIGHT INTO THE FRAUDS-SCAMS

DISCLAIMER

T he content of this book is written by the author with references where needed from various sources viz: news articles, internet web sites and some reference books as needed. This book or any part thereof is not to be copied, published in any format or methods. All rights are reserved. This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, or resold, hired out or otherwise circulated in any form of binding or cover other than that in which it is published. These conditions apply to the original purchaser or any subsequent purchaser of this book.

Dedicated to all fraud examiners, Forensic
Accountants, Auditors, Governments and statutory
authorities across the world who are fighting
Frauds and Financial Crimes.

TABLE OF CONTENTS

AUTHORS NOTE

I n the present day with the development of Technology and use of Internet, Cloud technology, Social media outburst, Frauds and Crimes have climbed to new heights and the fraudster is always one step ahead of the fraud examiners and thus it is a big challenge to stop fraud before it is committed.

Frauds have become a global challenge as there exists a fraud everywhere and thus the problem has no geographical boundaries and a continuous risk assessment, internal controls and preventive programs only can mitigate the threat of frauds and loss of billions of rupees to a large extent.

This book attempts to identify, the meaning of fraud, evolution of frauds and crimes, the various types of frauds, the Psychology of the persons committing the frauds and the detection and prevention of the frauds, red flags or warning signals and finally reporting of frauds, for suitable action by the courts of law. The book attempts to bring the evolution of frauds dating back to 1700s. Fraud is not a new concept of the present century but dates to 300 years or more. An attempt is also made to highlight some of the Crimes that were committed for the sake of Money.

The definition and explanation of the term Fraud has been repeated for emphasis at different sections before explaining a particular concept of fraud, for the benefit of the readers.

I hope this hands book gives an insight into this area of Frauds and will be helpful to one and all to understand the big danger lurking around the corner of any person, if one is not, aware and cautious, in his day to day dealings and usage of the internet, E-Mails, Social media, online hackers.

However, it is said that Those who live by the sword, tend to die by it.

At the end, it is apt to say, no Fraudster can escape the law and is always brought to book over a period. Hence it is a continuous fight against fraud by fraud examiners, auditors, and Government and Statutory authorities to bring to book the frauds and the perpetrators of fraud.

WHY PEOPLE COMMIT FRAUD OR CHEAT

It is interesting to first understand why people commit frauds or cheat before going into detailed chapters of the Book:

PART ONE

1. MEANING OF FRAUD

A Fraud is a deception by a person or group of persons to secure unfair or unlawful gain at the cost of VICTIM who trusted such a person viz. the Fraudster.

....... The nature of fraud is that it works outside your field of vision subverting the normal checks and balances so that the world changes while the picture remains the same....... (Ref: Lying for Money by Dan Davis).

A false representation of a material fact, either a misstatement or omission, with knowledge that the representation is false with total disregard for truth.

Fraud is simple for lying.

Fraud is a legal concept but not an accounting concept.

The incidence of fraud is so common that its occurrence is no longer remarkable, only its scale.... (Alvin Toffler).

Fraud is a deliberate and deceitful activity in order to gain an advantage or generate a profit, where the Victim of fraud, places full trust and believes, the person, committing the fraud.

Fraud is all about people.

Fraud is a grey subject with full of mystique and apathy.

Fraud can be simply explainedBehavior of one person, to gain by dishonest means an advantage over another person.

A Fraud can be a false representation knowing it to be false....

A fraud may be a misstatement or omission of material Fact.

A Fraud is nothing but love for Money...

A Fraud can be manipulation of Books of account commonly known as Fudging the books by false entries in the books of account.

Cheating the public with misleading and false promises...

Thus, it is aptly said that Fraud, is nothing but people.

Thus, a Fraudster, is a person who perpetrates a fraudulent act knowing it to be false with the sole intention of cheating another person who is a Victim. The development of technology in the detection and prevention of crimes and frauds has simultaneously increased the sophisticated methods used by the criminals and fraudsters to overcome such technological developments, thus making it difficult to prevent frauds before they occur.