I
agree with the above statement, business owners and managers think that fraud
won't occur in their business because their employees past performance has been
acceptable, and therefore it will be in the future to.
This
stance is highly problematic as according to the KPMG 2010 Fraud Survey the
total cost of fraud for all the respondents was $345.4 million. The respondents
also admitted that only 1/3 of total losses were being detected. 65% of the
major frauds were committed by employees who usually acted alone in the
organisation. So once a firm is aware that fraud is a serious potential risk, it
needs to take action to prevent it from happening.
Firstly
the company should promote a culture that deters fraud from occurring (Sacks,
2004). This is done by hiring honest people and providing them with fraud
awareness training, creating a positive work environment and development of a
code of ethics. Finally an employee assistance program should be implemented to
make sure employees don't feel any unhealthy pressure about there job.
This final
point was not done in my first job; I felt very unsure about what to do in a
lot of situations but received little to no help in regard to these issues.
This led to me not really caring about my job as I felt undervalued. Whilst I
had no intention to commit fraud, it doesn't mean others with the opportunity
to do so won't either.
Secondly
therefore, the firm has to eliminate opportunities to commit fraud (Sacks,
2004). This can be done by having strict internal controls, discouraging
collusion, monitoring employees, providing a tip hot-line, create an expectation
of punishment and audit proactively.
By
having both these policies in place, it will be less likely fraud will occur in
the organisation.
Sacks,
S. E. (2004). Fraud risk: Are you prepared? Journal of Accountancy, 198(3),
57-63. http://search.proquest.com/docview/206782293?accountid=13380
Interesting articles:
Here is a more interesting take on fraud detection by merely looking at the first numbers of a data set:
http://www.kirix.com/blog/2008/07/22/fun-and-fraud-detection-with-benfords-law/
Here is how to detect fraud by monitoring user behaviour:
http://search.proquest.com.ezp01.library.qut.edu.au/docview/230116396