The activity of reporting financial transaction data in each company is certainly different. The form of supervision of fraud in the form of fraud or manipulation of financial statements is not always the same.
Based on the Association of Certified Fraud Examiners (ACFE), Fraud is an intentional unlawful act carried out for a specific purpose, such as manipulation or giving false reports to other parties. These activities can be carried out by individuals from within or outside the company. The goal is to get personal or group benefits that harm other parties, both directly and indirectly.
Also read: The Importance of Managing Balance Sheet Reports in a Company
ACFE Global survey and research results show that every year an average of 5 percent of the organization’s income is a victim of fraud . On the website of the Financial and Development Supervisory Agency (BPKP), private companies and even State-Owned Enterprises (BUMN) are inseparable from the risk of fraud . This can be seen from the corruption cases involving state-owned officials increasing dramatically in the last two years. In the end, fraud control is the company’s responsibility.
In order to strengthen the anti- fraud culture in the company, several programs are needed, among others, strengthening the code of ethics, increasing awareness of fraud activities , the attitude of leaders, and anti- fraud socialization , both internal and external to the company.
Not only that, to prevent fraud in financial statements and facilitate the disclosure of activities indicated corruption, business organizations also need to design specific fraud risk control systems . One of them, a government agency designed 10 attributes of a fraud control plan . This is a deepening and strengthening of the governance system of each organization.
10 Fraud control plan attributes include, integrated policy, the structure of responsibility, fraud risk assessment , employee care, and community customer care.
In addition, there are also reporter protections, fraud reporting systems , external reporting, investigation standards, and standards of behavior and discipline.
ACFE divides fraud into three types of actions:
1. Misappropriation assets
This fraud is defined as the misuse or theft of company assets and assets or other parties related to the company. This is the easiest form of fraud to detect because it is measurable.
2. Fraudulent Statements
These crimes are generally committed by officials or executives of companies or government agencies to cover up the actual financial condition. You do this by manipulating transaction data or financial reports in the presentation of financial statements for profit.
This action is common in countries where law enforcement is still weak and governance is not good. This type of fraud is often not detectable because individuals work together to enjoy the benefits. That includes abusing authority, bribery, illegal reception, and economic exploitation.
The Fraud Case in Giant Companies
A number of cases of fraud occurred throughout the world throughout 2019. Giant companies that are known to have a good financial supervision system are apparently not free from fraud activities .
Facebook and Google Fraud US $ 122 Million
Esvaldas Rimasauskas, was charged with committing a crime of identity theft, financial fraud, and money laundering during 2013-2015. The man from Lithuania committed fraud against two giant technology companies from the United States (US), Facebook and Google.
The 50-year-old man committed fraud with a total loss of US $ 122 million. Each of Facebook US $ 99 million and Google US $ 23 million.
Esvaldas launched its action using the Business Email Compromise (BEC) method. He sent bills to the two companies using an email with the identity of Quanta Computer, a manufacturing company in Taiwan, complete with falsified documents and contract letters.
Facebook and Google trust the bill and send money. But in 2017, the action was discovered and Esvaldas was finally sentenced.
Fraud with the BEC method is mentioned not only experienced by Facebook and Google. Based on FBI data, the total losses suffered by companies around the world through BEC fraud reached US $ 12.5 billion. The modus operandi is generally to hijack emails and send them as if they were genuine from the company’s business partners.
The fraud case experienced by Facebook and Google is one example of a fraud type of misappropriation Asset type .
Polish the Financial Statements by Garuda Indonesia
PT Garuda Indonesia (Persero) Tbk claims to record a brilliant financial performance in 2018, with a net profit of US $ 809 thousand or around Rp 11.33 billion. However, two company commissioners refused to sign the financial statements because they suspected that there was an odd recording of transactions in order to polish the 2018 annual financial statements .
Two commissioners did not agree with one of the transactions in cooperation with PT Mahata Aero Technology, startups ( startup ) technology provider wifi on board , which are recorded as revenue by the management.
Also read: Understanding Financial Statements and Main Components
Chronologically, Mahata cooperates directly with PT Citilink Indonesia, a subsidiary of Garuda Indonesia which is considered profitable up to US $ 239.9 million. In this partnership, Mahata is committed to bear the entire cost of providing, installing, operating, and maintaining connectivity service equipment.
The Mahata party has not paid a penny from the total compensation agreed until the end of 2018, but management still records the report as compensation income for the right to install in-flight connectivity and entertainment service equipment. Until finally, Garuda Indonesia’s financial statements incised net profit.
However, it was detected by the regulator. In the end, the Indonesia Stock Exchange (IDX) gave a written warning III and imposed a fine of Rp 250 million to Garuda Indonesia, and demanded the company to improve and present the financial statements.
Not only that, the Financial Services Authority (FSA) imposes a fine of Rp 100 million each to Garuda Indonesia and all members of the board of directors. OJK also requires companies to correct and restate 2018 financial statements.
For the Public Accounting Firm (KAP), OJK froze the Registered Registration Certificate (STTD) for 1 year to KAP Kasner Sirumapea. On the other hand, the Ministry of Finance also suspended permits against AP Kasner Sirumapea for 12 months. The financial scandal experienced by Garuda Indonesia is an example of a fraud type of Fraudulent Statements .
“BUMN Synergy” leads to Corruption
Fraud through corruption also occurred in two national state-owned companies, namely PT Angkasa Pura II (Persero) and PT Industri Telekomunikasi Indonesia (Persero).
The two state-owned companies decided to work together in working on a project to procure a baggage handling system (BHS) worth Rp 86 billion. In the process, the Finance Director of AP II allegedly received a bribe of 96,700 Singapore dollars from the President Director of PT INTI as a gift of thanks for the project. In the process, the bribery transaction was carried out through an intermediary from PT INTI, and allegedly took place with the knowledge of the President Director of AP II.
In the end, the Corruption Eradication Commission (KPK) arrested AP II’s Finance Director, PT INTI’s Managing Director, and PT INTI’s intermediaries, and made them suspects. The case is an example of Corruption type fraud .
Observing a number of cases of fraud that occur in giant companies, business people certainly need to find ways to avoid the same case. One example of specific control is to use information technology in the form of Automated Fraud Detterence that can counteract fraud activities.
One option that can be made to make financial reports correctly and quickly is with the help of accounting software such as Journals. Journals can help you run a company’s accounting system quickly and accurately. You only need to input all transactions, the Journal will automatically process them into financial statements. Not only that, there are many other features that will facilitate work without ignoring the safety factor in recording financial transactions.