Fraud Prevention

White-collar crimes reach media headlines, generally reporting a dramatic embezzlement using computers or some sensational scheme in the upper echelons of the financial or corporate worlds. These infrequent reports leave many people believing that most executives of high finance and corporate affairs are crooks, because the only time they hear the words white collar crime are in relation to such individuals. On the other hand, many people believe that most corporate workers are honest and adhere faithfully to the law and display unquestioning loyalty to their corporate employers. In the real world, they are wrong on both counts.

What the media does not report is the daily looting of company cash and assets by commonplace corporate and industrial employees -looting that totals tens of billions of dollars each year. EPIS Fraud specialists have presented statistics disclosing that most corporate workers will steal if they get a chance, another sizeable group will steal if they think they can get away with it, and only a few will not steal under any circumstances.

Fraud is a generic term that encompasses all manner and forms of intentional deception. Lying, cheating, embezzlement, and theft are vernacular forms of fraud. In a causative context, fraud is both personal and environmental. For example, fraud perpetrators are generally motivated by economic need or greed. Environmental factors that breed internal fraud and create opportunities for embezzlement and theft include lax accounting controls and loose moral standards among the members of senior management.

The first type of theft we call robbery, with its many varieties, and the second we call fraud. While robbery is certainly more violent than fraud, and attracts much more media attention losses from fraud far exceed losses from robbery.

In the corporate context, fraud can be categorized as being internal (committed by insiders, i.e. officers, directors, employees and agents) and external (committed by outsiders i.e. vendors, contractors, and suppliers). Corporate fraud can also be classified as to those committed by insiders for the company (violation of government regulations, i.e. tax, securities, safety and environmental laws).

Corporate frauds are often detected by accounting discrepancies noted by internal auditors and by allegations of theft, corruption, or auditors and by allegations of theft, corruption or embezzlement received by security investigators. Frauds perpetrated by senior management involve the misrepresentation of facts in financial statements. In such cases there may be overstatements of assets, sales and profit, or understatements of liabilities, expenses and losses. Senior managers might perpetrate financial statements frauds to deceive investors and lenders or to inflate profits and thereby gain higher salaries and bonuses.

Frauds committed by low-level employees include such techniques as falsifying expense reports and benefit claims, embezzling funds, using corporate property for personal purposes, stealing corporate property, and accepting gratuities from vendors, contractors, and suppliers. Low-level frauds are often called transaction frauds, as distinguished from fraud in financial statements mentioned previously.

Security Associates is in a position to help deter and detect fraud that might be present in your organization. No two companies are the same, and we never institute the same procedures or techniques. The first step is to ‘scan’ the structure of your organization and detect any possible flaws in the system that would allow any possible fraudsters room to rob your assets. We can provide a range of services for this specific area of fraud, and our consultants are all well experienced in preventing and detecting fraud in all environments.

In a perfect world no one would steal. But given the opportunity and knowing that there is no one to find out, people are tempted to have ‘sticky fingers’. Please do bear in mind; fraud is committed by anyone! Not just low level employees or casual workers. In most cases based on our experience, people that you trust, and you would never suspect commit it. People that may already be entrusted in your organization and have worked for you for many years. Our job function is to help you identify, and eventually seal any loopholes in your organization’s operating system thus preventing or detecting any fraudsters from looting your organizations assets.