Fraud and Fraud Prevention Strategies

Fraud 5

Fraud and Fraud Prevention Strategies Paper

Name

Class

Date

Professor

Fraud

Fraud is the intentional act of stealing another individual’s identity or misappropriating funds from a business or an organization. These individuals intentionally steal money from their business or commit acts of deception to gain the money of their victims. They use forgery or alter documents in order to commit these acts of fraud and use the identification of others to gain access to financial and private information. The individual profits from these legal activities and can destroy the credit rating of individuals that have their identities stolen.

Identity theft is a form of fraud and one of the fastest growing crimes in American society. Over 11 million adults were victims of identity theft in 2009 and the total fraud amount was $54 billion (2010). Measuring fraud is an elusive target. No single national agency gathers omnibus fraud statistics (2010). The numbers of identity theft crimes continue to rise every year and one in ten Americans will fall victim to this type of crime. It is important for companies to protect the private information of corporate executives and other staff members.

The company will need to employ a prevention plan that includes a clear fraud policy. They will need to use detection strategies such as internal audits, internal controls, external audits, and designated reporting structures. Their needs to be an effective response to reports of fraud and both an internal and external investigation should be conducted.

The first step an organization can take in protecting the corporate executives is to encourage a policy of reporting any wrongdoings. The individual that reports acts of suspected fraud will be allowed to remain anonymous and an investigation should be conducted concerning the allegations. The employee that reports the suspected incident of fraud should be instructed to keep their suspicion quiet and go about their daily activities. The individual that reports the suspected incident of fraud will not receive any repercussions from the organization and the information will be kept confidential.

The first objective of the plan is to educate the executives on the environment in which fraudulent crime are more likely to occur (Spelman, nd). The next objective of a fraud prevention plan is to secure the private information of the corporate executives. All private information concerning the executives will be kept in a locked and secure location and will not be accessed by anyone but the appropriate personnel.

People commit frauds when there is an opportunity or incentive to commit the crime. The moral character of the individual also factors into the crime of fraud. People commit fraud out of financial need and the ability to commit the crime. If the environment provides an opportunity for a dishonest individual to commit the crime, they will. The culture of the work environment can play into the criminal’s ability to commit a crime. The goal is to control the environment through internal controls and increase the pressure against committing fraudulent acts. The next step is to take away the opportunity for the criminal to commits acts of fraud. The company will need to employ a prevention plan that includes a clear fraud policy. They will need to use detection strategies such as internal audits, internal controls, external audits, and designated reporting structures.

Regardless of size or sector, training, especially involving loss prevention, is critical to any business (2009). The first step in creating a loss prevention program is to first review the current procedures being employed by the organization. Training material can be developed from the information that is gleaned by this review. Once a plan has been designed the workshop will begin by training the individuals that will direct the workshops on the proper fraud and loss prevention strategies of the company. The workshops will be conducted in small groups and allow for any questions or concerns to be addressed. Employees will learn in a classroom setting and through role playing the different situations that can occur concerning loss prevention.

When the employees attend these classes they will learn strategies on loss prevention and awareness. They will gain understanding of the processes that create loss prevention and the steps to take to ensure these losses do not occur. The employees will learn company specific material concerning how to avoid loss and report any acts of intentional loss by other staff members.

References

(2009). Security Loss and Prevention Training. Retrieved October 11, 2010 from

http://www.lptoday.com/training.htm

(2010). ID Theft Statistics: Javelin 2010 Identity Theft Report. Retrieved October 11, 2010 from

http://www.spendonlife.com/blog/2010-identity-theft-statistics

Spelman, G. (nd). Fraud Prevention Plan Development and Implementation ECPA Model.

Retrieved October 11, 2010 from

http://www.dpsa.gov.za/documents/networks/ac_rm/FRAUD_PREVENTION