Definition of Fraud:
Accounting fraud is deliberate control of monetary explanations to make a veneer of an organization’s money related wellbeing. It includes a worker, account or the association itself and is misdirecting to financial specialists and investors. An organization can distort its money related proclamations by exaggerating its income or resources, not recording costs and under-recording liabilities.
Three reasons why to commit fraud:
Pressure in the work environment: When employees are under stressful environment, they might think bad and take unethical decisions only to reduce their problems.
The causes of pressure can be from multiple factors such as, family issues, financial issues, commanding manager or influence of coworkers.
An unappreciated employee: If the employer is not appreciated from either his/her manager, colleagues, or the work of his/her is not appreciated and valued might lead to fraud to prove themselves to others and be much valuable than before.
A chance to commit fraud: There is no chance to commit fraud unless it is available to do so. Even if the employee is under pressure or he/she is not appreciated it is impossible for a fraud to happen if there is no opportunity. An opportunity could be a weakness in the organization’s management system. Such as lack of financial auditing.
Types of fraud:
Stealing items from business property
Fraud of education certificate
Claiming benefits that he/she doesn’t deserve
How to prevent Fraud:
A recently KPMG make survey about Fraud and found that organizations are reporting more experiences of fraud than in prior years and that three out of four organizations have uncovered fraud.
So they made a list of top nine internal controls to prevent and detect fraud
1-Use a system of checks and balances to ensure no one person has control over all parts of a financial transaction.
2-Reconcile agency bank accounts every month.
3-Restrict use of agency credit cards and verify all charges made to credit cards or accounts to ensure they were business-related
4-Provide Board of Directors oversight of agency operations and management.
5-Prepare all fiscal policies and procedures in writing and obtain Board of Directors approval
6-Ensure that agency assets such as vehicles, cell phones, equipment, and other agency resources are used only for official business.
7-Protect petty cash funds and other cash funds.
8-Protect checks against fraudulent use
9-Avoid or discourage related party transactions.
Definition of Fraud: