WORK PLACE FRAUD

WORK PLACE FRAUD

.Workplace fraud is a common, everyday occurrence. Every business—large or small—is vulnerable to these crimes.

Workplace fraud can have a substantial impact on a business's “bottom line” and even on its continued survival and success. The financial impact of workplace fraud can be significant and can occur in the form of direct, indirect, and/or intangible costs.

In addition to direct losses of tangible assets, such as cash, inventory, and securities, loss of competitive advantage, reduced ability to meet customer needs, reputation impairment, and disruption of business operations are some of the potential indirect and/or intangible costs to a business. The challenge of combating fraud directed against a business is increased by the diversity and deceptive nature of those crimes.

Deception is a key element of workplace fraud, and a company may realize too late that it has been victimized. An appropriate response to the threat of workplace fraud requires understanding potential areas that are “at risk,” recognizing the fraud-related threats, and understanding the potential fraud origination points, both internal and external.

Although it is not possible to completely eliminate fraud risk, it is possible to reduce the risk and to minimize fraud-related losses and other consequences through effective loss control measures. Fraud risk management includes establishing effective loss control measures that focus on prevention, detection, and response.

Given the potential costs of workplace fraud, proactive fraud risk management makes good business sense. Bottom line: Businesses are targets for crime because they have something of economic value.

Fraud perpetrators believe that they can successfully steal, ■  compromise, or use some of that value. There is virtually no limitation to the means that may be employed to accomplish a criminal objective. The criminal mind is ever alert to seemingly new and unique ways to separate a business from its assets. Crimes that businesses face generally may be categorized as: “Street crime,” such as robbery and burglary. “White-collar crime,” such as fraud, misconduct, and related financial threats. 

Defining Fraud Anti-fraud professionals agree that fraud (and misconduct) encompasses activities involving dishonesty and deception that can drain value from a business, either directly or indirectly, whether or not the perpetrator(s) benefit. Fraud involves the intent to defraud; that is, the perpetrator relies on · His or her deception to accomplish—or hide—the fraudulent activity. ·

Fraud is not accomplished via honest mistake or error. · Fraud can manifest itself in a wide variety of ways and originate from a number of different sources. · Fraud that is perpetrated by employees, consumers, and vendors dominates most instances of fraud experienced by businesses. Understanding the fraud threats against your business, as well as why fraud typically occurs, are first steps in analyzing fraud risk and developing an appropriate plan for managing that risk.