What is Fraud?
Fraud can seriously affect the solvency of a business. If it goes undetected fraud will not only hurt the bottom line but contribute to a negative culture among staff and affect your credibility in the market.
The greatest fraud risk to a business is the thought that fraud is not a threat at all.
A good business constantly reviews its policies, practices and systems against internal and external threats. It is vital that businesses are aware of what constitutes fraud, either as an internal or external threat, regardless of whether or not the business thinks it is at risk.
Internal threats more often than not involve staff taking advantage of poor or inadequate practices and systems especially in areas such as:
External threats primarily involve:
Fraud does not always involve the notion of monetary gain. On the contrary, it can be defined as encompassing a wide variety of corrupt, deceptive, dishonest or unethical behaviours.
The following definitions are provided as examples of fraud:
What is Credit Card Fraud?
Credit card fraud is primarily defined as the unlawful use of a credit card and or credit card facilities by using:
It normally occurs in the following ways:
Contributing factors to credit card fraud are:
What is Identity Theft?
Identity Fraud involves an individual representing himself or herself to a business as either another real person or a fictitious person in order to obtain goods, services, money or another benefit. This representation is more often than not supported by fraudulently obtained, altered or counterfeited documents that a business may rely upon as proof of that person’s identity in its client handling procedures.
How do I prevent fraud?
Have a Fraud prevention plan. Fraud can flourish in an atmosphere of ignorance and neglect. However, a fraud prevention plan will help your business seek out actual and potential fraud, particularly when administrative and managerial staff and individuals exploit weaknesses in the systems.
The implementation of a fraud prevention plan is a critical part of the monitoring process for management and treatment of employees and customers who may consider committing some fraudulent act on the business.
The key to a good fraud prevention plan is:
Most businesses rely upon their accountants or, in some cases, an independent auditor to identify irregularities in their processes and cases of suspected fraud. Rather than hope your adviser can fix everything, be proactive and implement your own simple audit strategy as part of a fraud prevention plan. The following principles constitute a sound audit strategy:
How do I report fraud?
Laws of each state in Australia vary on the need to report fraud to the police and other authorities. Any complaint of fraud must be made by a person with the authority to claim ownership of the entity, as such the Managing Director will consider the legal obligation for fraud to be reported, and if the matter is in the best interest of The Company to report.
All incidents of fraud are serious incidents, but other factors such as the recovery of funds may take priority. The Company acknowledges that debt recovery is a competing priority, and the need to be seen as “tough on fraud” is also important. The importance of weighing these factors up properly is the reason that the final decision is left with the Managing Director.
Any report to authorities will include:
Policy for civil proceedings to recover the proceeds of fraud or corruption
Fraud in many cases is not only a criminal matter, but creates a civil debt as well. In all cases the options to recover the funds need to be explored. The Company is a business and as such the need to protect our financial stability is paramount. There are a range of civil recovery processes available for recovery.