Republic of the Philippines

Sultan Kudarat State University

City of Tacurong

The biggest loser of this is the integrity of the banking system

Maria Victoria Lopez, 54, Vice President of the Corporate Service Unit at Metrobank’s Makati head
office. Lopez faces charges of qualified theft, falsification and violation of the General Banking Law.
Lopez was handling a corporate client which has a P25-billion credit line and allegedly executed two
loans worth P900 million and P850 million. Lopez made a “falsified letter” from the client ordering the
bank to issue a manager’s check in favor of an individual payee for interest payments for the loans,
amounting to P2.25 million. Lopez was arrested while trying to move the stolen money to an unspecified
personal account. The money was taken from the credit facility of one of the Metrobank's biggest
corporate clients. Lopez had served Metrobank for over 30 years and received a monthly compensation
of at least P250,000.

Effects on Financial System

The effect of fraud on bank deposits is better appreciated from the standpoint of cash depletion. The
phenomenon is capable of creating a liquidity trap in the entire banking system and could possibly
cause a bank failure depending on the size and frequency of occurrence. Banking fraud hurts both
banks and their customers. Banks incur substantial operating costs by refunding customers’ monetary
losses while bank customers experience considerable time and emotional losses. They have to detect
the fraudulent transactions, communicate them to their bank, and initiate the blocking and re-issuance
or re-opening of a card or account. Fraud may damage the bank-customer relationship because of
shattered trust and confidence as well as increased dissatisfaction because of a perceived service
failure. This, in return, may negatively affect customer loyalty and stimulate switching behavior, thereby
hurting the banks’ reputation and impeding the attraction of new customers

Joel Carlo B. Argonza II BSA-4A

 Effects on accounting profession

Poor ethics in accounting result not only in increased incidences of criminal activities, but also hurt the
business through harming its reputation and rendering their financial statements untrustworthy and thus
useless. Poor ethics amongst a business' accountants means that those persons are more willing to
break the rules to benefit either themselves or their business illegally. Accountants play an important
role within small businesses by handling the company’s financial records. Managers, creditors and
investors depend on accurate accounting information to make good business decisions. Accounting
fraud can cause irreversible damage by ruining the reputation of a business and forcing the company
to go out of business. Legal charges may be brought against individuals participating in financial fraud.
Once caught and tried, accountants as unethical as to commit crimes related to their profession are
punished. Depending on the specific circumstances of the case, this can result in prison time, financial
costs and other legal punishments to the accountants found guilty. Not only is this devastating for said
accountant, it is also devastating on both friends and family, particularly the family.

Joel Carlo B. Argonza II BSA-4A