Fraud can seriously affect the solvency of a business. If it goes undetected it will not only impact upon the business’s bottom line but also contribute to a negative culture amongst staff and possibly affect business credibility in the marketplace.
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 really 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; however, it can be defined as encompassing a wide variety of corrupt, deceptive, dishonest, or unethical behaviours.
The following definitions are provided as examples of the average persons understanding of fraud:
Consequences of Fraud:
It is also important that businesses understand the consequences associated with fraud. The following consequences should be noted as examples that occur when fraud prevention or control plans are not implemented or actively monitored.