Corporate fraud

Extract

[...] I The prevention of fraud, an essential step for companies in the fight against fraud Typology of different types of fraud Corporate fraud is classified into three categories: Misuse of assets, corruption and fraudulent financial statements. Diversion of assets refers to any plot involving the theft or misuse of assets belonging to an organization. Two methods can be used by the fraudster to divert money (including checks or money orders): Skimming: It refers to diversion of revenue before the organization records the same in the books. [...]

[...] Reports are an important mode of detection. It is essential that all stakeholders have access to signaling devices namely employees, customers, suppliers and other stakeholders. Detection of major frauds is undertaken by company alerts. In case of small companies, external audits are effective tools for determining fraud. The alert system is less efficient in this type because they have no formal reporting mechanisms. Detection of fraud in listed companies requires the presence of internal controls. External audits are rather inefficient, [...]

[...] Illegal tipping means any intrigue when an individual offers, gives or receives or solicits anything from an official or business transaction without his client's consent. This includes acceptance of a free trip by an employee following his decision to award a contract to a supplier. Extortion: This refers to the coercion of another person to complete a transaction or to deliver goods. This act is based on the use of force or threat of force, fear, or economic constraints. For example, an employee threatens to stop ordering from a certain supplier unless the supplier makes cash payment. [...]

[...] In its newsletter in April 2000 entitled "The corporate fraud, a phenomenon underestimated”, Ernst and Young says the best solution for prevention of corporate fraud is a particular integrated approach simultaneously considering four areas between which there are continuous exchanges. These four areas are: administrative (regulations, procedures, internal and external regulations and definition of responsibilities), staff (increased focus on recruitment and selection), management (transparency of management, stability control and management rigorous exercised by the board of directors), the investigation of fraud (determination of the scope and objectives of the investigation, establishment of processes and techniques for gathering information).” Pricewaterhouse is of the view that the prevention program must include, among other things, constant surveillance, a continuous risk assessment and development of policies to encourage and protect whistleblowers. [...]

[...] However, creating an environment that aims to prevent fraud is not clear, for several reasons. Firstly, the information is not something obvious. It will protect and guarantee the confidentiality of employees who inform the direction of fraud. Then, the measures can have a negative impact on the working environment and could be interpreted as a lack of confidence. Communication plays a vital role in this area. Initiatives should be presented positively as serving the general interest of the company. Profile of fraudsters: Let us analyze the profile of fraudsters. [...]