Growing Discussions On Corporate Scams At Law 2.0 Conference

Corporate Scams

Get additional benefits, many organizations and individuals get into unlawful practices, which lead to corporate scams. There are various forms of corporate scams, including fake accounting and manipulation of services or products. Although companies extend their limits by strengthening their policies, creating a system of checks and balances.

Sometimes, even these multiple security checks fail to identify these corporate scams, and it is why many conferences for lawyers are globally discussing these corporate scams and looking for ways to identify and thus prevent them. 

Different Types Of Corporate Scams, Highlighted At Law 2.0 Conference

  • Accounting Scams

Generally in accounting scams, accountants, and sometimes the organization make a deliberate manipulation in the financial statements to falsify the corporation’s financial status. Falsifying financial statements is done by overstating its profits, unreported spending and misrepresenting the company’s gains and losses. Let’s dive deeper into these accounting scams. 

  • Overstating The Profits

One of the ways adopted by companies to conduct accounting scams is the overstatement of their profits. Various lawyers at Law2.0Conf shared that many times when companies go through losses. they cover it up by falsifying their company’s revenue. It helps them maintain their company’s market position as higher income creates a better place, increasing their shares and encouraging people to invest in these companies. To make a better impression in the market, these companies overstate their profits, which in reality is an accounting scam, highlighted at many law conferences in the USA

  • Unreported Spending

Many times, companies don’t record their expenses to prevent the downfall of their position in the market. The company’s net income is overstated on the financial statement by underreporting the costs, which saves its marketplace reputation. And no outsider gets to know about the company’s actual finances. 

  • Misrepresentation Of Company’s Gains & Losses

In this, an organization understates its losses and overstates its gains to misrepresent the company’s total revenue. By misrepresenting the company’s revenue, the company can get investors to invest in the company, believing that the company has enough revenue to pay for the liabilities. 

  •  Vendor Scams

Vendor scams are the most challenging corporate scams, highlighted at the Law 2.0 Conference by various legal professionals. In this, scammers trick the company’s paying department into paying a vendor, or many vendors, some money that is legally not theirs. Researches reveal that vendor scams are challenging to uncover, and it takes somewhat around 18 months to detect this scam. People conduct this scam under financial pressure; some believe that the chances of getting caught are rare, so they indulge in it, and a few others take it as revenge from the company, which is paying them less than what they deserve. Let’s discuss the various types of vendor scams.

  • Over-Billing

Sometimes vendors add products or services to the total bill that were not even delivered, hoping that the company’s amount of payables won’t have enough time to match the invoice with the delivered products or services. Vendors try to take undue advantage of bulk orders from the company. To prevent such over-billing scams, companies need to automate the billing and checking process of availed services or products from these vendors.

  • Fictitious Vendor

In this, an employee creates a fake vendor or invoice to get the amount for the services or products they never delivered to the company. even though The whole purpose is to get money from the company, and the employee creates false documents like invoices, bank accounts, phone numbers, email IDs, and non-existent tax ID numbers. Lawyers at law conferences in the USA highlighted that nobody questions the employee because of trust, and the authorities sign a check for the counterfeit vendor. 

  • Check-Tampering

It is the most common practice in the vendor scams underlined at Law 2.0 Conference. In this, the employee or third party makes unlawful use of the check to illegally acquire or borrow funds from the account holder without their legal ownership. It is usually done by altering, forging, or intercepting the check into their bank account.

  • Bid-Rigging

Bid-rigging is an illegal bidding process in which the vendors coordinate with each other, leading to a rise in the price compared to fair bidding. The increase in price affects the consumers and taxpayers associated with the bidding process. Bid-rigging can take other forms, like asking for competitive bids in exchange for the business bids, pre-deciding the winner of the bids, and some vendors bribing the employees to give the contract to their company. These are the few types of vendor scams as spotted at various conferences for lawyers

  • Payroll Scams

These are the most common corporate scams involving cash theft from the company via a payroll processing system. The employees conduct these payroll scams to get funds that aren’t assigned to them. At the Law 2.0 Conference, many lawyers shared scams conducted by employers, known as furlough scams, gaining popularity in recent times. The furlough scam was encouraged by the government’s pandemic financial aid, in which employers ask for some financial assistance from the government for their employee’s health issues. Let’s explore common types of payroll scams. 

  • Ghost Employee Scam

Ghost employees are the ones that exist only on paper, receive payments, and don’t actually work in the office. The payroll staff appoints ghost employees or extends the working period of the ones who have left the organization and keeps paying them as employees. It works best in big companies where it becomes difficult to track the number of employees. Many times, there is no deduction in the payrolls as the executor wants to keep all the money. Many conferences for lawyers highlight that periodic audits need to be conducted to track ghost employee scams in working organizations.  

  • Timesheet Scam

It is the most common corporate scam in organizations where employees are paid on the basis of their hourly efforts. Employees try to add more hours to their sheets to get paid accordingly, whereas, in reality, they are investing less time in the office and are outside the work area. A few common examples of timesheet scams are:

  • Adding incorrect entry and exit timings
  • Untrue claims regarding the working hours
  • Asking someone else to punch in and out for them
  • Advance Retention Scam

Sometimes, employees ask for advance payments on their pay and then never pay them back. It works when the accounting department doesn’t record advances or never monitors returns. As this scam involves inactivity by the recipient and a lack of managing records. Regular monthly reviews can quickly eliminate these advance retention scams. Companies need to ask their account departments to be more aware of sanctioning advances and tracking employee returns. Some company`s policies can also be framed around these advance payments. It will discourage employees from asking for advances to conduct a scam as the company will now note them. 

  • Tax Scams

Tax scams are the ones in which the taxpayer intentionally submits wrong monetary information to save or pay less tax. Many people hide their actual income, manipulate the numbers, and adopt many more ways to run away from taxes. Let’s discuss the most common forms of tax scams discussed at various law conferences in the USA

  • False Income Declarations

 Many lawyers at the Law 2.0 Conference addressed that every non-inclusion of cash is a scam. 

  • Using Bogus Numbers

Using fake numbers can lead to heavy tax penalties as well. Using an incorrect number while filing your taxes without referring to the original numbers can also bring unexpected trouble. It would be hard to explain, that the numbers were wrong, i.e., saving you some taxes. It’s always better to fill in the numbers after confirming to prevent filing any false tax documents. 

  • Counterfeit Reductions  

Another type of tax scam discussed at various conferences for lawyers is the one where taxpayers present wrong deductions in their tax reports. In short by claiming false deductions, expenses, or credits, individuals can save themselves from giving away huge taxes. That is the actual tax they are supposed to pay.  

These were the few common corporate scams that business people implement to save money and keep their reputation intact. But, lawyers at the Law 2.0 Conference revealed they had witnessed many such scam cases where the end is not worth doing all these practices.  

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