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The Nature of Fraud

Even with the difficulties in measuring fraud, most people believe that fraud is a growing problem. Both the numbers of frauds committed and the total dollar amounts lost from fraud seem to be increasing. Longitudinal studies that assets fraud levels over time are needed. Although slightly different from fraud such longitudinal studies of cheating in school have been conducted. Table 1.1 shows  how dramatically the incidences of cheating have increasing.

Table 1.1  cheating in school

High schoolers who said they had cheated on an exam in last 12 month Year

1996

Percent

64%

Year

1998

Percent

70%

Study Authors

Josephson Institute of Ethics

College students across the nation who admitted  to cheating in high school. 1940s 20% Present 70% Stephen Davis, psychology professor at Emporia State University
High school students admitting to cheating on exam in last year 1992 61% 2002 75-98% Josephson Institute of Ethics survey of 12. 000 students
High school students who had cheated in past 12 month 2000 71% 2002 74% Josephson Institute of Ethics
Students who had stolen 2000 35% 2002 38% Josephson Institute of Ethics
Willing  to lie to get a job. 2000 28% 2002 39% Josephson Institute of Ethics
Number of students self reporting instances of unper mitted  collaboration at nine medium  to large state universities 1963 11% 1993 49% Donald L. Mc. Cade  of Rutgers University
Percentage of American high school students who judged cheating to common among their peers 1940s 20% 1997 88% Who`s Who Among American High School Students survey of 3,210 “high achievers“   In 1997
The number of high school students who admitted using a cheat sheet on test 1969 34% 1989 68% Study by Fred Schab at the University of Georgia
Students who admitting to letting others copy their work 1969 58% 1989 98% Study by Fred Schab at the University of Georgia

Because fraud affects how much we pay for goods and service each of us pays not only a portion of the fraud bill out also for the detection and investigation of fraud. It is almost impossible to read a newspaper or business magazine with out coming across multiple incidents of fraud.

Even more alarming than the increasing number of fraud cases is the size of discovered frauds. In earlier times, if a criminal wanted to steal from his or her employer,  the perpetrator  had to physically remove the assets from the business premise. Because of fear of being caught with the goods frauds tented to be small. With the advent of computers, the Internet  and complex accounting systems employees  now need  only to make a telephone call misdirect purchase invoices bribe a supplier manipulate a computer program  or simply  push a key on the keyboard to misplace company assets. Because physical possession of stolen property is no longer required and because it is just as easy to program a computer to embezzle 1000000 $ as it is $ 1,000, the size and number of frauds have increased tremendously.

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