Accountant Town

All about counterfeiting

It should be noted that counterfeiting does not necessarily involve the production of money alone.
Counterfeiting as an act basically refers to the illegal imitation of something. It can be of anything in
this world and the underlying factor here is that it is done in an illegal way, which means that it is done without the consent of the original producers. Making of counterfeit products began way back as people tried to look for ways of developing similar products that would lead to quick profits before people can realize that they are indeed fake. The range of products to counterfeit is quite detailed and some people have even been known to specialize in certain items that are easy to execute.

It takes a lot of skill and a keen eye to be able to successfully achieve a product that is similar to the
original. It should also be noted that counterfeiting will require to spend some money as you need
to buy the items needed to set up the ground work for the production of the counterfeit. The most
common form of counterfeiting involved the production of money. There are however other forms such
as imitations on art, clothing, software, toys, electronic appliances, pharmaceuticals just to mention but
a few.

How counterfeiting works

As earlier mentioned, counterfeiting requires a keen attention to detail in order for it to work
effectively. Remember that you’re trying to dupe the consumers into believing that the product on
offer is somewhat similar to the original hence you have to cover each and every end contained in the
original. Take for instance the issue of counterfeiting electronic appliances. This will require a similar
design just like the original but the creators usually change the name of the product slightly, maybe by
a letter or two. In such cases, the counterfeiting may result in patent infringement or even trademark
infringement.

How are counterfeits caught

It may come as a surprise to many but detecting counterfeit products can be quite easy. This will
however require the expertise of a professional forensic expert who will be able to detect this. however,
to the naked eye, a counterfeit product may appear to be just like the original and it needs to be
checked by a professional to be able to tell the difference. There are some professional forgers that
can easily fool people into believing fake products. A professional analysis of the product in question
will easily reveal the flaws behind the product design and thereafter inform the public of its being a
counterfeit.

The consequences of counterfeiting

Various countries have certain laws that have been set on the production of counterfeit products.
This however depends on the category of forgery as some carry serious charges while others are quite
shallow. Money forgery is however the most highly charged offense as it involves interfering with a
government product that can cause serious problems in the market. Counterfeiting of consumer goods
is treated separately as some of those involved use certain tricks to get away.

An overview of check kiting

The whole idea behind check kiting basically revolves around the fact that this is an act of fraud whereby
the conspirators take advantage of their individual skills and brilliance in executing their theft. It’s
more or less what you would call a modern day type of con where a lot of skill is needed. What the
conspirators basically do is try to take advantage of the float so as to make use of non existent funds in a particular bank account. Some forensic experts have classified this as being a form of check fraud as they are more or less similar.

The process of check kiting involves a process of writing a check that has a higher value than the exact
account balance in that particular account. The same thing is done with a separate bank account which
also has insufficient funds. Any financial expert will agree that the purpose of doing so it to falsely inflate the current balance of a checking account. This is actually a very brilliant act of trickery as it will enable the written checks to clear, as opposed to bouncing which they would normally do. The practice also requires a lot of confidence as not many people would be able to accomplish such a task all the way to the end without chickening out.

How check kiting is done

As earlier mentioned, check kiting involves a process where you will write two separate checks on two
separate bank accounts that all have insufficient funds. In order for this to be effective, it is advisable to write the separate checks on accounts from separate bank accounts which should all have insufficient funds. Remember that you’re trying to trick the bank into inflating the bank balance of the account so as to allow written checks that would otherwise bounce to clear.

There are quite a number of categories of check kiting, all of which are performed at different levels and
at different magnitudes. The categories include retail based kiting, circular kiting and corporate kiting.
The most common out of these is retail based kiting which involves the use of a separate entity other
than the bank in order to provide lacking funds in an account which will thereafter enable a check to
clear. This is usually done unknowingly to the separate entity whose funds are being used to con the
bank. Circular kiting and corporate kiting are usually executed at a much higher level and involve the use
of millions as the players as sometimes inside men.

The laws and consequences of check kiting

Those who are usually involved in check kiting need to be aware of the repercussions that they’re likely
to face as this is something that the government takes seriously. The first and most important thing to
note is that check kiting is illegal in most, if not all countries. The United States prosecutes culprits of check kiting under quite a number of existing laws set against bank fraud, misapplication and required
entries. The charges can draw a fine of up to a million dollars, imprisonment of up to thirty years or even both in some cases.

What is bid rigging?

Otherwise known as price fixing, bid rigging has to be one of the most common accounting frauds
ongoing in the market even today. The whole idea behind bid rigging basically involves the fact that
market competitors will decide to come to an agreement and artificially increase the prices of goods
and services that they offer. This is usually done so as to survive in a market where the business trends
are not all that favorable for quick profits hence the companies decide to collude to their own benefit.
It’s inception into the market can be traced way back a number of years and it is very much likely to
continue.

Basically, the competitors will decide to raise, fix or even maintain the market price of their goods or
services. They will definitely agree to this as it means that they will make quick profits. The time fixation period will usually be agreed on and after they have reached their target profits, they can resume to their previous competitive prices. This is usually done when the business times are quite bad and they still need to stay afloat. The period will usually be agreed on so they can recoup their monies and once that has been done, they will get back to their usual trends as though nothing happened.

How price fixing is done

In as much as the competitors are usually involved in price fixing, it should be noted that they will not
necessarily agree on charging the same price. It is not even assured that the other competitors will
join in the conspiracy. There are a number of methods of trickery used to execute this successfully. It
can take many forms such as establishing price discounts, holding prices firm, eliminating discounts,
adopting a standard formula for computing prices, adhering to a minimum fee or price schedule, fixing
credit terms just to mention but a few of those involved.

How are bid riggers caught?

The fact of the matter is that detecting bid rigging can be a very difficult thing to do. Remember that
were dealing with collusions, which are difficult to uncover as all the parties involved are on the same
page. What makes it even more difficult is that the collusive agreements are usually done in secret and
only those conspiring will know what is going on, and there is no documentation of the same. It only as
a result of suspicions aroused by unusual pricing patterns or statements by one of the vendors that can
reveal exactly what is going on.

The consequences of price fixing

Should the suspicion of price fixing be followed upon, the parties involved are likely to face a very tense period. It all depends on the respective body that will be pursuing the charges as some are known to
be quite pressing while others will just be looking for evidence which can be hard to find. The exerted
pressure and threats can cause one of the conspirators to crack and that would definitely spill the beans.
It is however difficult to do so especially when there is no evidence at hand.

Read more about Accounting Fraud today.