A Brief History Of The Governmental Fraud

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Abstract

 

        This paper will give the readers a brief history of the governmental fraud of what is currently happening and how does governmental fraud impact on economy. Government accounting is another ball game altogether where a lot of things like frauds happens all of a time. It will tell what are the issues of governmental fraud and what are the governmental frauds that currently happens as a huge issue. This research paper will help to examine frauds in local government by illustrating whether a local government’s control to its incidents of fraud. We would synthesize to have better understanding of a fraud that highlights the most issue that impact the economy negatively. The Association of Certified Fraud Examiners (ACFE) studied in 2009 about the impact of weak economy based of off the numbers of frauds that the being detected by CFEs, called Occupational Fraud. Throughout the whole research paper, it would define what are the issues and what caused them to do fraud and how might the government solve. Many large corporation fraud led to many certain illegal things like cheating, etc. About 49 percent discovered a huge money loses due to fraud. Even though government shouldn’t be cheated by other but still fraud can be by misusing the very standards that are supposed to protect the public’s interest.

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Introduction

 

Fraud is often defined as wrongful or criminal deception intended to result in financial or personal gain. The impact of fraud ranges from financial loss to declines in organizational performance, credibility, and public confidence. As a result, risk management strategies and internal control systems should be implemented, monitored, and modified as necessary by management and governing bodies. Prevention and detection. Have you ever heard the saying, Don’t be that guy? Well in this case, Don’t be that government. In a recent study, 1 government and public administration was the second most likely industry to be impacted by fraud. A finding from that study showed the presence of anti-fraud controls is associated with reduced fraud losses and shorter fraud duration. Management and those charged with governance are responsible for ensuring these controls are in place. This article will explore common fraud schemes and provide prevention and detection controls that can be put in place to help mitigate fraud risk.

 

There are many types of frauds in government make by govt. servants and also ministers.In research now a days fraud ratio increase in govt. sector.Research fraud explain by current issue given below

 

Recent cases of research misconduct

 

In April 2016, a former University of Queensland professor, Bruce Murdoch, received a two-year suspended sentence after pleading guilty to 17 fraud-related charges. A number of these arose from an article he published in the European Journal of Neurology, which asserted a breakthrough in the treatment of Parkinson’s disease.The sentencing magistrate found that Murdoch forged consent forms for study participants and that his research was such as to give false hope to Parkinson’s researchers and Parkinson’s sufferers. She found there was no evidence at all that Murdoch had conducted the clinical trial on which his purported findings were based. Murdoch’s plea of guilty and evidence that he was suffering from severe depression and dealing with a cancer diagnosis were factors that resulted in his jail sentence being suspended. In 2015, Anna Ahimastos, who was employed at the Baker IDI Heart and Diabetes Institute in Melbourne, admitted to fabricating research on blood-pressure medications published in two international journals. The research purported to establish that for patients with peripheral artery disease (PAD), intermittent claudication (a condition in which exercise induces cramping pain in the leg) treatment with a particular drug resulted in significant improvements. It had significant ramifications for treatment of PAD and, presumably not coincidentally, also for uptake of the drug. Ahimastos’ research was later retracted from the Journal of the American Medical Association following an internal investigation by the Baker Institute. However, while she lost her employment, she was not criminally charged.

 

As radical criminology continues to gain popularity among a new generation of scholars, there are several troubling developments that ought to be met with caution. In recent years, other research fraud cases have been reported around the world, such as that involving anesthesiologist Scott Reuben, who faked at least 21 papers on his research on analgesia therapy. His work sought to encourage surgeons to move away from the first generation of non-steroidal anti-inflammatories (NSAIDs) to multi-modal therapy utilising the newer COX-2 inhibitors. Reuben was a prominent speaker on behalf of large pharmaceutical companies that produced the COX-2 drugs. After it emerged that he had forged the name of an alleged co-author and that in a study that purported to have data in relation to 200 patients, no data existed at all, he was charged with criminal fraud in relation to spurious research between 2000 and 2008. He was sentenced to six months’ imprisonment after the plea on his behalf emphasised the toll that the revelations had taken upon his mental health. In 2015, in the most highly publicised criminal case in the area so far, biomedical scientist Dong Pyou-Han, at Iowa State University, was sentenced to 57 months’ imprisonment for fabricating and falsifying data in HIV vaccine trials. He was also ordered to pay back US$7.2 million to the government agency that funded his research.

 

Accountability issue

 

It is easy to dismiss such examples of intellectual dishonesty as aberrationsrotten apples in an otherwise healthy scholarly barrelor to speak of excessive pressures on researchers to publish. However, there is a wider accountability issue and a cultural problem within the conduct and supervision of research, as well as with how it is published. A review of the 2,047 retractions listed in PubMed as of May 2012 found that 67.4% were attributable to misconduct. This included fraud or suspected fraud (43.4%), duplicate publication (14.2%) and plagiarism (9.8%). This does not prove that the incidence of retractions is rising, and it may be that researchers and journal editors are getting better at identifying and removing papers that are either fraudulent or plainly wrong, but it strongly suggests that the checks and balances are too often inadequate until problems are belatedly exposed. As for cultural issues, a 2012 survey by the British Medical Journal of more than 2,700 researchers found that 13% admitted knowledge of colleagues inappropriately adjusting, excluding, altering or fabricating data for the purpose of publication.

 

Harm caused by fake research

 

More commonly, though, instances of comparable fraud have not resulted in criminal chargesin spite of the harm caused. In the Netherlands, for instance, over 70 articles by social psychology celebrity psychologist Diederik Stapel were retracted. His response was to publish a book, entitled in English Derailment, telling all about how easy it was to engage in scholarly fraud and what it was that led him to succumb to the temptation to do so. The book gives memorable insights into the mind of an academic fraudster, including his grandiose aspirations to be the acknowledged leader in his field: My desire for clear simple solutions became stronger than the deep emotions I felt when I was confronted with the ragged edges of reality. It had to be simple, clear, beautiful and elegant. It had to be too good to be true. And then there’s the notorious case of the Japanese scientist Haruko Obokata, who claimed to have triggered stem-cell abilities in regular body cells.

 

An inability to replicate her findings resulted in an investigation. The inquiry revealed not just fraud in her postdoctoral stem cell research, but major irregularities in her doctorate. This resulted in the removal of her doctoral qualification, retraction of the papers, professional disgrace and resignation from her employment. But the ripple effect was much wider. Obokata’s co-author/supervisor committed suicide. There was a large reduction in government funding of the research establishment that employed her. Her line of research into cells that have the potential to heal damaged organs, repair spinal cords and treat diseases such as Alzheimer’s and diabetes was discredited, and grave questions were asked about the academic glitches that allowed her to obtain her PhD. Despite this, Obokata too published a book denying impropriety and displacing responsibility for her conduct onto others.

 

Researchers tempted to fake results

 

The temptation for researchers to fake their results can take many forms.It can be financialto acquire money, to save money and to avoid losing money. It can be to advance one’s career. It can also be a desire to attract or maintain kudos or esteem, a product of narcissism, and the expression of an excessive commitment to ambition or productivity. It can be to achieve ascendancy or retribution over a rival. Or it can be the product of anxiety about under-performance or associated with psychiatric conditions such as bipolar disorder. What all of these motives have in common is that their outcome is intellectual dishonesty that can have extremely serious repercussions. A difficulty is that research fraud is not difficult to perpetrate if premeditated.

 

Peer review

 

The check and balance of peer review in publication has, at best, a modest prospect of identifying such conduct. In peer review, the primary data are not made available to the reviewer. All that the reviewer can do is scrutinise the statistics, the research methodology and the plausibility of the interpretation of the data. If the fraud is undertaken professionally, and a study’s results are modestly and sensibly expressed, the reviewer is highly unlikely to identify the problem. In 1830, the mathematician Charles Babbage classified scientific misconduct into hoaxing (making up results, but wanting the hoax at some stage to be discovered), forging (fabricating research outcomes), trimming (manipulating data) and cooking (unjustifiable selection of data). Experience over the past 20 years suggests that outright forging of results is the most successful mechanism employed by the academically unscrupulous, although those who engage in forging often also tend to engage in trimming, cooking and plagiarismtheir intellectual dishonesty tends to be expressed in more than one way.

 

Removing temptations

 

The challenges include how we can remove the temptations of such conduct. Part of the answer lies with clear articulation of proprieties within codes of conduct. But much more is required. A culture of openness in respect of data needs to be fostered. Supervision and collaboration need to be meaningful, rather than tokenistic. And there needs to be an environment that enables challenge to researchers’ methodologies and properties, whether by whistleblowers or others. Publishers, journal editors and the funders of scholarly research need to refashion the culture of scholarly publication to reduce the practice of gift authorship, whereby persons who have not really contributed to publications are named as authors. The issue here is that multiple authorship can cloud responsibility for scholarly contribution and blur responsibilities for oversight across institutions by ethics committees.

 

Journals need to be encouraged to be prepared to publish negative results and critiques and analyses of the limitations of orthodoxies. When allegations are made, they must be investigated in a way that is going to command respect and confidence from all stakeholders. There is much to be said for the establishment of an external, government-funded Office of Scholarly Integrity. This could be based on the model of the US Office of Research Integrity, which is resourced and empowered to investigate allegations of scholarly misconduct objectively and thoroughly. Finally, there is a role for the criminal law to discourage grossly unethical conduct in research. Where founders are swindled of their grants, institutions are damaged by fraud and research conduct is brazenly faked, such conduct is so serious as to justify the intrusion of the criminal law to punish, deter and protect the good name of scholarly research. This is social issue of research fraud in govt.frauds there are many aspect include.

 

Who is responsible for fraud prevention?

 

According to American Institute of Certified Public Accountants (AICPA) auditing standards,2 the primary responsibility for prevention and detection of fraud rests with those charged with governance and management. There are a number of strategies to help management and public officials navigate the challenges associated with prevention and detection of fraud.

  1. Understand your organization and industry: Explore key drivers of revenue and related benchmarks, be active in the budget process and evaluate historical trends.
  2. Brainstorm with department heads, key members of management, external and internal auditors to identify fraud risks: Review material weaknesses, compliance findings, and control deficiencies related to the financial and single audits. Also consider decentralized operations. Examples of control weaknesses that contribute to fraud include: lack of internal controls, lack of management review, override of existing controls, poor tone at the top, and lack of competent personnel.
  3. Assess the tone at the top and the entity’s culture: It is imperative that organizations set an appropriate tone at the top, one that demonstrates a commitment to honesty and ethical behavior.
  4. Create a whistleblower policy: Establishing a whistleblower hotline and/or policy is critical. History has shown that the initial detection of fraud most often occurs through a tip followed by management review, internal audit, or by accident.
  5. Understand the objective of a financial audit and a forensic audit: The Association of Certified Fraud Examiners reports that less than 10% of frauds are discovered as a result of a financial audit conducted by an independent accounting firm. That is because a financial auditor is required to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether caused by fraud or error. There is a risk that, even though an audit is properly planned, material misstatements may not be detected. Whereas, the objective of a forensic audit is to determine whether fraud has/is occurring and to determine who is responsible. While management and governing bodies are typically trusting, simple blind faith in a trusted employee alone is not sufficient. Management and governing bodies need to also verify what they are being told or shown. This begins by promoting an organizational culture of honesty and ethical behavior and includes spending time following through, holding others accountable, and asking probing questions. The simple tactic of verifying information can act as a deterrent, which could reduce the likelihood of fraud.

 

What common fraud schemes look like and how to prevent/detect fraud

 

It is easy to dismiss such examples of intellectual dishonesty as aberrationsrotten apples in an otherwise healthy scholarly barrelor to speak of excessive pressures on researchers to publish. Skimming. Money intended for the government that an individual takes for personal use. For example, cash receipts may never get entered into the system or they may be entered, but then voided/manipulated. This type of fraud is more likely to occur in unsupervised areas that lack controls over accepting cash. Limit unsupervised cash collection locations. For remaining unsupervised cash collection locations, implement procedures for reconciling receipts and ensure deposits are properly reviewed and supported. For all cash collections, track, reconcile, and review adjustments made to fees charged and collected, and analyze deposits over time to identify anomalies. Forgery or alterations. Includes checks, p-cards, vendor invoices, or employee payroll that are forged or altered.

 

Be aware of a lack of security surrounding unwritten checks and signature stamps, little to no oversight or segregation of responsibilities, and the failure to account for all checks, wires, and electronic payments. Develop appropriate check processing and reconciliation procedures, and ensure the approval of disbursements includes accounting for the entire sequence of payments (checks, wires, electronic payments, etc.). Do not pre-sign checks. Require dual signatures. Finally, limit the number of bank accounts used by decentralized locations. Someone independent of check processing and distribution should reconcile all bank accounts. Unauthorized vendor distributions. Payments may be made to a fictitious vendor for goods never received or a legitimate vendor for personal goods. Vulnerable situations that allow for unauthorized vendor distributions occur in departments without effective oversight. Vulnerability may also stem from the lack of segregation between ordering, receiving, and approval functions.

 

Therefore, create and update purchasing, procurement card, wire transfer, and vendor management policies. Purchasing policies should address limits and purchasing authority; as well as authorization for users, daily and transaction limits, and documentation requirements. When new vendors are created, limit access to select personnel who are not involved in the disbursement or approval process. Ensure all new vendors are appropriately reviewed and approved by a supervisor. Unauthorized payroll disbursements. This can include fictitious employees, unauthorized pay increases, or overtime. An inadequate review of employee timesheets or lack of reconciliation of payroll records to disbursements is another gateway to unauthorized disbursements. Enforce appropriate payroll process policies and controls. Similar to the creation of new vendors, creation of new employees or financial disbursements in the payroll system should be limited to select personnel who are not involved with the approval process. A supervisor should review new employees added to the system on a regular basis, and review of payroll or financial disbursements should be assigned to someone independent of the process.

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