FIGHTING FRAUD

Knowing Different Ways that

Organizations Fight Fraud
Fraud
prevention

The
Follow-up legal
action and/or
organizations Early fraud
resolution fight fraud by detection
implementing

Fraud
investigation
FRAUD PREVENTION
Fraud Prevention

Fraud prevention is the most cost-effective way in order to reduce fraud.

The effective fraud prevention involves two fundamental activities:-

Assess the risks for fraud

Taking steps to sustain
and maintain a culture
of honesty and high
ethics
and also develop the
concrete responses to
mitigate the risks and
also to eliminate the
opportunities for fraud

The organizations also use several ways to create a culture of honesty and
high ethics.
Fraud Preventions (Cont): Five Critical Elements

To make sure that top management

models the appropriate behavior in
the organization

To hire the right kind of employees

Communicates the expectations throughout

the organizations and also require the periodic
written acceptance to the expectations

To create a positive work environment

To enforce the policies for handling

fraud when it occurs
 Fraud Prevention (Cont) Tone At The
Top
Research found out that, the honesty can be best reinforced when there is
a proper example or model sometimes referred to as the tone at the top.
The management must reinforce to their employees through their actions
that dishonest, unethical behavior etc will not be tolerated.
Research been done on why people lie are due to:-

Have fear of punishment or adverse consequences

Have habit of lying

Have had negative modelling and always seen others to lie

Feel that, they would not get what they want, if they tell the truth
Fraud Prevention (Cont) Hiring the
Right Kind of Employees
Hiring the right employees is the second key element in creating a culture
of honesty and high ethics.
Proactive hiring procedures must be taken into considerations which
includes:-

Conduct background investigation on employees

Checking references

Learn how to interpret responses to inquiries asked about

candidates

Test on their honesty and attributes

Ethical Maturity Model
Ethical Leadership
Helping others to be Ethical

Ethical Courage
Willingness to Pay the Price for
Ethics

Application of Ethics to Business

Situations
Fraudulent Practices, Misleading Advertising,
Unfairness

Personal Ethical Understanding

Right/Wrong, Fairness, Honesty, Personal Integrity, Respect
for Others
Fraud Prevention (Cont)
Communicating Expectations

Giving
Identify and adequate
codify training to the
appropriate employees in
values and fraud
ethics awareness

Communicate
consistent
expectations about
the punishment of
violators to be taken
 Fraud Prevention (Cont) Creating a
Positive Work Environment

Fraud will occurs less frequently when the employees

have:-

Positive feelings on the organizations

A sense of ownership in their organization

 Fraud Prevention (Cont) Policies Enforcement for
Handling Fraud when it Occurs
An effective policy for handling fraud, the entity should ensure that:-
The facts are
investigated
thoroughly and firm
Every organization Consistent actions
should have a been taken against
fraud policy fraudsters

Provides
Assess and improve
adequate training
the controls
to the employees

Communicates
with the entity
Fraud Prevention (Cont) Assessing
and Mitigating the Risk of Fraud
Implemen
Identify
t the
and
preventive
measure
and
the fraud
detective
risks
Creates controls
Having
the internal and
external
widesprea auditors to
d provide an
monitoring independent
checks on the
by the performance
employee of the
s company