Fraud

I agree with the statement that awareness and education is the key to defeating fraud within today’s organisations, according to constantly high incidence of fraud through last decade. However, it must combine with internal control and deduction of pressure for optimal effectiveness in minimising the incidence of fraud.

As I discovered that those organisations with high fraud risks are all lack of effective internal control, otherwise employees in those companies are under too much pressure. To be specific, fraudsters may exist if there is no formal risk management framework can be used to monitor and evaluate internal control. The reason is that internal control monitoring can provide assurance regarding effective and efficient operations and compliance with applicable laws and regulations. Additionally, internal control mechanisms are able to reduce opportunities to commit fraud risk. In terms of employees’ overload pressure, which comes from various aspects, such as home loan payments, gambling debts and desire of appearing successful. Such pressures are potential motivations for employees to commit frauds. I found that most common characteristics of high fraud risk organisations include high turnover of staff and profits tied salary structure. Therefore, internal control and reduced pressure play a significant role in lowering fraud risks. Nevertheless, resources and time spend on developing an ethical culture are good long-term investment. The better educative efforts to build ethical organizational climates and better management behavior would keep organisations out of high fraud risks.

In order to build a fraud-intolerant environment within organisations, I recommend three strategies. Firstly, establishing an effective fraud control system that provide an expectation of punishment for breach and define responsibility for fraud. Secondly, developing a corporate code of conduct that list expectations about bushiness practices and employee conduct to avoid dishonest and unethical practices. Additionally, promoting a culture of honesty and openness by operating a employee assistance program. 


 
http://www.anao.gov.au/html/Files/BPG%20HTML/Government%20Fraud%20Control%20BPG/5_1.html