Question

How to Prevent internal fraud in Corporate?

Complete the problem statement for your research effort. You should refine and thoroughly discuss the topic problem for your Term Paper

Answer 1

How to Prevent Corporate Fraud

Although corporate fraud causes large losses, there are ways to prevent and lessen the damage done by perpetrators. Companies who have anti-fraud controls in place have less fraud cases reported and lower losses.

In fact, for 58% there was a partial recovery of losses. In 14% there was a full recovery of assets loss. With quick action and the right controls in place you can recover losses.

Most companies think that external audits (which are typically long and expensive) are the only way to discover internal fraud–this is far from the truth! Only 3% of cases were discovered through audits!

Here are some other ways you can lower the chances of fraud in your business, whether you are a small company or a multi-branch organization:

1. Tip System

Surprisingly, tips were the most common method of discovery for fraud. 40% of cases were detected by a tip. Organizations with hotlines get the most tips, have 41% less costly fraud cases and detect perperators 50% more quickly. If you are too small for a hotline, don’t fret, tips also come regularly from fellow employees, customers and vendors (in order of prevalence).

• Be sure to set-up an easy and anonymous tip system for employees, vendors and customers. Make this easy to find and apparent in the work environment.
• Encourage a culture of honesty. Vanessa does trainings for small and large companies around the world on improving their human capital and creating a culture of honesty.

2. Data-Mining

If you are a technology based company. Consider doing proactive data monitoring. Companies who had data monitoring systems had 60% less costly fraud cases and 50% shorter duration.

3. Recognize Behavioral Traits

Occupational fraudsters exhibit certain specific behavioral traits that are early warning signs for colleagues and employers. In 92% of cases reviewed there was one common behavioral red flag that was identified before fraud was confirmed. Managers and employees should be trained to recognize warning signs.