80 pages:Embezzlement and its effects on Performance of large Companies in Cameroon.

CHAPTER ONE

Background To The Study

understanding Embezzlement

Embezzlement is the act of dishonestly withholding or misappropriating funds or property entrusted to one’s care, typically in a professional or fiduciary capacity. This white-collar crime involves an individual exploiting their position to take money or assets for personal use. Unlike theft, embezzlement involves a breach of trust, as the perpetrator legally possesses the funds or property but unlawfully converts it to their own use. Common examples include employees stealing from their employer or financial advisors misusing client funds.

Most enterprises have been forced to improve their performance by rethinking how they deliver products to customers and how they can quickly address their needs in a constantly changing environment as a result of globalization and fierce competition. In order to enhance performance and maintain competitiveness in today’s global and dynamic market, these organizations must comprehend fraudulent activities. As a result, not only will the company perform better, but they will also be able to work more effectively to enhance their performance as a whole (Seddon, 2019).

The scandals of Eron , worldcom ,global crossing has left public awareness about the impact of fraud on business organization. Fraud is a global problem that is affecting the society as whole, it cut across a work of life. It has been in existence for a long time, and it is a complex problem, since fraudsters will always try not to leave any trace. A lot of resources time and energy are used up in developing corporate governance police, implementing internal control system, risk strategy and training of employees to adhere to these measures but some dishonest, intelligent people commonly refers to as fraudster, still manage to funnel ways to override system (Petra & Spieler, 2020). 

According to the association of certified fraud examiners (ACFE, 2016), fraud refers to unlaw acts carried out intentionally for certine purposes (manipulating or giving false reports to other parties), carried out by people from inside or outside the organization to obtain personal or group benefits, which directly harm other parties.

According to the Information, System Audit and Control Association (ISACA) defines fraud as a deliberate misrepresentation which course another person to suffer damages, usually monetary loses.Kanu and Okorafor(2013), noted that the causes of fraud depend on the environment. According to their classification, technology, legal, personal, social and management are some of the factors that could easily influence Fraud. Technological causes are those which have been made possible by the advancement in transfers (EFT). Legal causes of fraud are those that enhance frau as the result of inefficient legal system.

Management causes of fraud are those actions or omissions by management of the organization which leads to fraud. Personal causes of fraud are those perpetrated by individuals due to under develop character as a result of poor up bring. Social causes of fraud are those enhance due to poor societal values, where the society adores a rich person without checking the sources of wealth.According to Yulistyawati, Suardikha and Sudana (2019), the specific  types of fraud that limit organizations remains asset misstatements arising from fraudulent financial report and misstatement arising from the misappropriation of assets. Regular fraudulent activities still take place even when a company has been regularly audited. 

When fraud is handled improperly, it can erode public and business confidence and damage a country’s reputation on the global and financial levels. Thus, this has attracted large companies to reliable auditors for prevention, detection and deterrence of fraud in these organizations and giving credibility to client ‘financial reports (Esteki, Regueiro, & Simal‐Gándara, 2019). To these large companies, all the attention given to fraud by them is basically for them to improve their performance.

Regarding organizational performance, the foundation of it is the generation of value. As long as the value given exceeds the asset’s predicted value, the pledged asset will be available to the company. Since it is only through performance measurement that firm performance could be accomplished, it is important to first understand what performance measurement was all about (Francis & Atem, 2010). Results achieved are measured by performance.

Efficiency of performance is defined as the ratio of effort to output. The performance improvement zone is the area where performance deviates from the theoretical performance limit. An organization’s capacity to handle its finances is measured by its financial performance. Based on a company’s assets, liabilities, revenue, expenses, equity, and profitability, it is assessed. Financial ratios are important metrics. Using information from financial statements, it assesses the financial health of businesses.

Large companies can be defined as those with significant financial resources, extensive operational capacities, and a sizeable workforce. These firms are often involved in a wide range of activities and have a significant impact on the economy of the region. The following are some of the large companies operating in the Southwest Region of Cameroon and their towns of location: Pamol Plantations, which is a leading agribusiness company that operates in the Southwest Region of Cameroon. Pamol Plantations is headquartered in Limbe and has several plantations across the region, Guinness Cameroon SA which is a subsidiary of Diageo, a multinational firm that produces and distributes alcoholic beverages.

The company has a brewery in Douala and a distribution center in Buea, Dangote Cement Cameroon which is a subsidiary of Dangote Industries Limited, a Nigerian conglomerate that specializes in cement manufacturing. The company has a plant in Douala and is expanding to other regions of Cameroon, MTN Cameroon, which is a subsidiary of the South African telecommunications company MTN Group. The firm provides mobile telecommunications services to clients across the country and has offices in Buea, and the Cameroon Development Corporation, which is a state-owned agribusiness company that operates in the Southwest Region of Cameroon. The firm has several plantations across the region and is headquartered in Bota, Limbe.

Different theories have provided insight to fraud, and its impact on organizational performance. Some of these theories include; the fraud triangle theory that was developed by Donald cressey in 1971. The theory advocated that three factors make people commit fraud which are, perceived pressure, perceived opportunity and perceived rationalization. Again, another of such theories that provides insight to fraud and performance is the advance theory of fraud (Georgios, 2019). The focus of this theory is on the fact that fraud is perpetrated by individuals who are working for the organization, who are able to identify opportunities and take advantage of it.

In general, fraud crumbles organizations. For better performance, these organizations should be able to efficiently handle fraudulent activities in the organization. Cameroon which has been heated with the anglophone crises remains different especially, for larges companies located in the heart of the Southwest region that have been limited by the anglophone crises.

These organizations through-out this period has been limited on the sphere to closely monitor and follow up fraudulent activities. Has this been the contributing factor to a reduction of its performance, or the performance of these organizations has been limited by different factors. This study is out to investigate the impact of fraud on the performance of large companies in Cameroon.

Problem Statement

A lot of attention has been given to most of the predominant factors that affect the performance of most organizations such as management, budgeting techniques, the reporting systems and etc. But recently, paramount attention has been tilted to fraud, as most organizations have come to the realization that it is one of the contributive factors to their performance. Despite the fact that fraud is given paramount attention recently, Fraud remains a historical issue that affects all organizations. Frauds have recently gained attention and caused losses for numerous organizations,

which continue to be a major concern. Organizations that usually commit fraud, it is true, do not take the time to fully comprehend the actual dangers associated with fraud and do not try to detect and prevent it (Zhu eta al., 2021). It is evident that most often, the fraudulent activities committed in most of these large companies are, corruption, assets misappropriation and financial statement fraud. Thus, one of the motivating factors to this study is to ascertain amongst these, which of them greatly influence the performance of large companies in Cameroon.

Again, different empirical studies have investigated fraud and performance, globally, in Africa and in Cameroon. Some of these studies are that of Akinyomi (2012) who studiedthe nature and causes of fraud in Nigeria banking sector. Also, Odi (2013) investigated the impact of fraud on Commercial bank performance in Nigeria.

While in Cameroon, Samuel (2020) carried out research on the impact of fraud micro financial institutions’ performance. Despite the existence of so many findings, limited attentions have been given to the aspect of fraud and performance in the case of Large companies in Cameroon. This is the problem that this study is out to solve by investigating the impact of fraud on the performance of large companies in Cameroon.

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