Fraudulent money transfers: a case from Turkey
| Pages | 125-136 |
| Date | 08 May 2009 |
| Published date | 08 May 2009 |
| DOI | https://doi.org/10.1108/13590790910951803 |
| Author | Cenap Ilter |
| Subject Matter | Accounting & finance |
Fraudulent money transfers:
a case from Turkey
Cenap Ilter
Grant MacEwan College, Edmonton, Canada
Abstract
Purpose – The purpose of this paper is to show to the public in general and auditors in particular
that the money deposited to the banks that operate in an uncontrolled medium can be misused by
owners of the banks.
Design/methodology/approach – The paper has been designed based on a fraud theory.
The theory has been developed on financial analysis and audit tests. The theory then revised and the
existence of a bogus company and its intermediary role in the fraud scheme has been proven.
Findings – The paper explores that banks controlled by unreliable owners can lead to misuse of
public’s funds in accordance with the directives of the owner. Public’s money can be transferred to
other group companies in an illegal manner-in excessive amounts and never returned to the bank by
means of applying different accounting techniques.
Practical implications – Auditors, who may audit group companies that include a bank or banks
with deposit receiving and lending rights should pay attention to the transactions between the group’s
bank and the other group companies. The lending may be excessive in amount and/or never paid back
and various accounting malpractices may exist.
Originality/value – The case that the paper covers reflects the author’s own audit experiences.
The names of the companies have been changed but not the essence of the events. From this
perspective it sheds light onto the path of an auditor who happens to be in a similar situation.
Keywords Fraud, Money, Banks,Turkey
Paper type Case study
1. Conditions for fraud
Three conditions of fraud arising from fraudulent financial reporting and
misappropriations of assets are described in Section 5135.012 of the Canadian Institute
of Chartered Accountants Assurance Handbook titled “The auditor’s responsibility to
consider fraud and error”. As shown in Figure 1, these three conditions are referred to as
the fraud triangle:
(1) Incentives/pressures. Management or other employees have incentives or
pressures to commit fraud.
(2) Opportunities. Circumstances provide o pportunities for man agement or
employees to commit fraud.
(3) Attitudes/rationalization. An attitude, character, or set of ethical values exists
that allows management or employees to intentionally commit a dishonest act,
or they are in an environment that imposes pressure sufficient to cause them to
rationalize committing a dishonest act (Arens et al., 2005).
The cost of all frauds is extremely high. For example, when a company manipulates its
financial statements, the market value of that company’s stock usually drops
considerably, sometimes by as much as 500 times the amount of fraud. To further
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
Fraudulent
money transfers
125
Journal of Financial Crime
Vol. 16 No. 2, 2009
pp. 125-136
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790910951803
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