Internal Corporate Compliance Services: Examples of Corporate Compliance Violations

Creating a corporate compliance program for a privately held business isn’t easy, but the right program can save your business from lawsuits and loss of reputation. Proper retention of financial records  is essential for maintaining compliance with the law. Examples of financial records include tax returns, inventory records, sales contracts, brokerage statements, and expense reports. The experts at Money Mastery LLC can help you figure out the accuracy of your business records and bring to light any hidden issues.

Corporate Corruption

Corporate Corruption is a catchall term for financial fraud by management or those in positions of power. If an employee in your business is entangled in corporate corruption it can result in fines, imprisonment, or irreparable trust in your company. This can be avoided by creating a system of accountability for all employees, especially those  in management positions. Since businesses without proper documentation can face legal penalties you may be asking yourself, what are corporate compliance violations and how can I avoid them? Here are three examples of corporate compliance violations.

Bribery

Bribery is one example of corporate corruption. Since the most famous bribery cases involve foreign affairs, businesses should be aware of the Foreign Corrupt Practices Act (FCPA), where a U.S. person or company cannot offer or pay anything of value to any foreign official. 

• In recent news a former contract manager for the California Department of Transportation was caught in a bribery scheme from 2015 through 2019 where he would always give preferential treatment to a certain company over many others in a contract bidding war. He accepted bribes in many forms which totaled to over $800,000. In addition to paying restitution, he is facing a prison sentence of 10 years. 

• Know that if an employee of your company gives or accepts a gift in return for a promotion or other reward, there must be immediate consequences by management.  

Corrupt Tax Practices

Corrupt Tax Practices are linked to many examples of corporate compliance violations and are discussed at length in our Financial Fraud and Theft blog, Most tax crimes require proof of willful intent to forge, alter, or evade taxes.

• In 2021, a business owner in New York pleaded guilty to both tax evasion and employment tax fraud. From 2014 to 2017, he withheld federal employment taxes from his employees’ wages, but failed to pay more than $85,000 in payroll taxes. He also did not file federal income tax returns for two years, even though he earned just under $2,000,000 in income. He is facing over two decades in prison for his crime. 

• Money Mastery LLC can help you spot a range of suspicious tax activities  including, tax evasion, money laundering, and falsification of financial documents. 

Embezzlement

Embezzlement is another example of corporate compliance violations, and can come in many forms. It involves someone in your company who is trusted with funds or company property. The trusted person may use electronic funds, wire transfer, credit embezzlement, cash skimming, or forged negotiations to make an illegal profit from your company. It is more commonly found in small businesses than large ones. 

• A bookkeeper in Indiana is being charged with wire fraud (a form of embezzlement) after she used her position to embezzle a total of over $1.8 million from a small business. She was responsible for recording all deposits and payments in the company’s ledger, which she provided annually to the company’s accountant. She also had access to the company’s checkbook. She would secretly cut checks to herself up to 15 times per month. To hide her crime, she intentionally understated the company’s revenue on its ledgers. 

You can maintain corporate compliance and protect your privately held business from financial fraud and theft. Money Mastery’s internal compliance services  can help you identify corrupt practices before it’s too late. Don’t let your money slip away, contact Money Mastery LLC today!