Posted: April 4th, 2015

Commit a Fraud

Fraud

Fraud can be defined as an individual intentional act to deceive a client either an individual or organization in a means to deprive them money or any property that can be quantified in monetary terms. The victim of fraud loses the property and is entitled to a law suit as fraud is a crime. The act is malicious and thus punishable in a court of law and damages may be awarded to the victim of the act while the defendant having to pay the damages he or she has caused. Fraud is very common in organization where one or many clients in an organization may wish to deceive the organization off with money or property. Most fraud crimes occur when low control is offered for use of organization resources and thus they take advantage of the no control policy to fraud. Fraud results in loss to the company as it loses money and property to its employees. The employees trick the company out of its resource so that they benefit themselves as a result. Proper records of the entire company asset should be kept and maintained so as to always know where each item or machinery is and who is in charge of the asset. Proper record help to identify default assets and replacement is done so that the operations of the organization do not come to a halt. When an organization wishes to hire an individual the human resource department needs to know how the employee was at the last job or responsibility he or she had. This will help give a good record of all employees that the company wishes to hire and their professionalism and accountability (Rose, Susan, and Tina, 65).

Types of fraud

Asset misappropriation

Asset misappropriation can be defined as the act of misuse of a company asset or even theft of the asset by employees. A lot of asset misappropriation occurs among people with a lot of responsibility in the organization and when a chance comes along they tend to be controlled by self interest and end up misusing the company asset for personal benefit. Asset misappropriation may be internal or external in any given organization and thus proper control and security of these assets should be carried out. Auditing is a better and effective way to ensure that company assets are being used in the right manner. Fraud in organization affects the working conditions of other employees if one individual fraudulently takes a property of the company for personal use rather than have the rest of the other employees to use. For example, a manager may use to use print papers for his personal printing and thus cause a delay and waste of company resources (Fraud Analysis Techniques).

Corruption

Corruption can be defined as the act of embezzlement of an organization’s resources and may also be termed as bribery. Corruption is the use of power to influence others to make decisions that favor you or for personal interest. Corruption may also occur when hiring employees in the organization where a manager in the organization may field his or her own candidate who lacks the necessary qualifications for the position. It may occur when an individual bribes a management team member so as to have a contract signed for him or her (Rose, Susan, and Tina, 65).

Financial information fraud

Financial fraud is the most common fraud in organization as people with the authority to access financial information of an organization manipulate the accounts to appear more appealing to their own personal accounts without knowledge of the other employees. Accountants may wish to change the figures in the book of accounts and this constitutes fraud as they may post less money received and pocket the rest of the money. This causes the organization to suffer loss as not all revenue in the organization are posted in the books of accounts as they should. Internal auditors should be hired to lower the risk of this fraud ever occurring in the organization as million of dollars are lost by organizations through this means (Anti-fraud Risk and Control Workbook).

Cybercrime

Cybercrime can be defined as the act of a person using a computer connected to a network to commit crime that is geared towards deceiving a group of people out of their assets or money. Cybercrime also constitute crime as it takes a computer operator to intentionally harm or cause harm to an organization that can be constituted to loss. The act is geared towards harming the reputation of an individual or an organization through a malicious act by using modern technology to undertake the act. Cybercrime has been known to cause and threaten the national security. It includes website hacking or account cracking to infringe some document that are confidential to a given individual or organization. Cybercrime tends to ruin the issue of confidentiality of a person’s information. The crime has risen over the years to include theft of a person’s finances from his or her account by a hacker who accesses the financial details and fraudulently transfers money to his personal account (Wall, 56).

How to prevent fraud in an organization

Many frauds that occur in business organization are due to poor control of the organization assets and its machinery that make it so easy for employee to circumnavigate the system and thus carry out fraud. Fraud in organization may cause the organization to fail in achieving its set goals as its resources are used in other non objective activities by the employees and this delays progress and growth in the organization. The organization needs to keep and maintain better control of its process where a supervisor will always keep good record of the assets of the company and update the system to make sure that none of the assets goes missing from the store. An organization should always hire accountable employees who will always guide the resources of the company so as to facilitate better processes. Fraud in organization affects the working conditions of other employees if one individual fraudulently takes a property of the company for personal use rather than have the rest of the other employees to use. For example, a manager may use to use print papers for his personal printing and thus cause a delay and waste of company resources. This type of personal greed also can be termed as fraud when one employee uses the resources of the company for the personal purpose and this should be discouraged at all cost. The company continues to incur some extra costs that are not geared towards its operations and when it wishes to replace the machinery taken up by fraudulent employees. Proper records of the entire company asset should be kept and maintained so as to always know where each item or machinery is and who is in charge of the asset. Proper record help to identify default assets and replacement is done so that the operations of the organization do not come to a halt. When an organization wishes to hire an individual the human resource department needs to know how the employee was at the last job or responsibility he or she had. This will help give a good record of all employees that the company wishes to hire and their professionalism and accountability. The big question is, can they be trusted with the assets of the company may they be money or other resources. When a manager is hiring a new employee he or she should scrutinize the curriculum vitae of the potential employee and note if they have cheated on any of their qualification one should know that they will also cheat in the job and thus tend to have fraudulent tendencies. Thus the character of an individual will always be reflected by how he or she carries and operates on the job. Another way to prevent fraud in an organization is by creating a good conducive working environment where each employee is rewarded competitively to avoid the tendency of engaging in fraud. Well motivated employees are able to work well in the organization and this helps them to protect the organization resources and report any misappropriation that may be intended by another work mate. Control of financial information can be emphasized by hiring qualified accountants and book keepers who will carry out their tasks with professionalism and accountability. Access to financial information and documents should be minimized to few people who are given the responsibility of making sure that the information is safe and in order. Internal auditors should be hired to lower the risk of this fraud ever occurring in the organization as million of dollars are lost by organizations through this means. Passwords may be issued for individuals with the responsibility of handling crucial information and documents in the organization where their work is monitored by a group of supervisors (Wells, 96).