Think of a recent business fraud or scandal you’ve heard about in the news, or choose one that has been mentioned in your reading. For example, you might consider one of the following:
PPP FRAUD (see below) https://fortune.com/2020/12/27/biggest-business-scandals-of-2020-nikola-wirecard-luckin-coffee-twitter-security-hack-tesla-spx-mcdonalds-ceo-ppp-fraud-wells-fargo-ebay-carlos-ghosn/
Research the scandal, paying close attention to how it was possible for whatever went wrong to happen.
Specify the scandal you chose, and be sure to cite any sources where you conducted your research. Then respond to ALL of the following questions in your initial post:
Were there controls in place that should have prevented the scandal or fraud from happening? Explain what types of controls existed using the terminology in your reading (feedback, proactive, concurrent, strategic, operational, tactical, top-down, objective, normative, financial, nonfinancial).
If so, why do you think the controls were ineffective? If not, why do you think the business didn’t have sufficient controls in place?
What was management’s role in the failure of the controls?
Did the business implement new controls in response to the scandal? If so, do you think they’ll be effective?
The $670 billion behemoth known as the Paycheck Protection Program is, by most measures, the largest small-business relief program in American history—a cornerstone of the federal government’s response to a once-in-a-generation pandemic that has devastated small-business owners across the country.
Yet nine months after it was enacted as part of the $2.2 trillion CARES Act pandemic aid package, PPP is swiftly becoming more synonymous with the least flattering aspects of government intervention: namely, waste, graft, and fraud that critics say was enabled by mismanagement and a lack of transparency on the part of the Trump administration.
Instances of PPP fraud are legion and continue to pile up, from the fake Florida ministry that allegedly received more than $8 million in government funds to the Texas man who allegedly poured nearly $1 million of PPP money into cryptocurrency. Those cases appear to be only the tip of the iceberg; there are suggestions that hundreds of millions, if not billions of dollars of taxpayer funds, may have been fraudulently allocated through PPP, with government watchdogs acknowledging the possibility of “widespread potential fraud and abuse.”
The Trump administration, for its part, points to the program’s successes in allocating more than $520 billion to roughly 5.2 million American businesses, enabling many to save jobs and keep workers on their payroll during a time of severe economic distress. But even on a legitimate basis, the program clearly had its flaws. Data recently released by the Small Business Administration suggests that more than half of all PPP funds went to only 5% of recipients and more than a quarter went to only 1%, with large and well-capitalized public companies among the beneficiaries of that lopsided distribution.
What’s more, there’s ample evidence that many small businesses—particularly minority-owned ones, which were hit disproportionately hard by the pandemic—weren’t able to get the money they needed through the program. Meanwhile, wealthy celebrities and well-connected politicians found it all too convenient to get the funds they desired.
As one government watchdog put it: “Fundamentally, this program was poorly designed and irresponsibly run by the Trump administration.” —Rey Mashayekhi
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Think of a recent business fraud or scandal you’ve heard about in th appeared first on Skilled Papers.