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Topic 4 - How fraud, theft and taxation affect business (Types of fraud…
Topic 4 - How fraud, theft and taxation affect business
Types of fraud
Fraud is divided into 3 types:
- fraud by false representation
- fraud by failing to disclose info
- fraud by abuse of position
Internal fraud
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Invoice fraud - forges sales for goods which they haven't purchased in order to use the money themselves/ overpay for goods
Personal management fraud - staff on 'false' sick leave/ misuse of time/ getting a job or higher pay with false qualifications
External fraud
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Identity fraud and internet fraud are also common problems for businesses as they can lose thousand of pounds to hackers or have their confidential information stolen
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Corporate fraud
The victims of corporate fraud are shareholders, banks and customers
Insolvency related fraud - a limited company is set up, buys goods, takes out loans, takes money from investors and then declares themselves insolvent (bankrupt) so will not have to repay debts
Phoenix companies - a company carries out insolvency fraud, then sets up another limited company with the same owners but a different name
Asset stripping - when a company buys all of another company's assets, leaving them with nothing except debts
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