Fraud in the enterprise: Detection and counteraction

Fraud in the enterprise: Detection and counteraction

Fraud in the enterprise is a rather dangerous phenomenon that has many adverse consequences. First, it is damage to the business reputation/brand and loss of profit.

In addition, if information about the unreliability of the company’s security system spreads among the public (and sometimes business partners), the company may be subject to criminal and legal measures. And, of course, if there is news of fraud, the company, of course, incurs material losses.

To prevent these consequences, experts refer companies to the use of such a tool as forensic accounting services in India.

Forensic accounting is an important tool for protecting companies, which helps to avoid negative actions on the part of the state or shareholders, employees, or customers.

Companies and their management are at risk of being embroiled in litigation, criminal investigations, complaints from disgruntled employees, etc.

Consequently, protecting a company, its officers, and its directors often require forensic accounting to ensure that decision-makers are fully informed about the real situation.

Since the term “fraud” falls under the criminal law category, the reasons for such actions should be sought by forensic methods.

Besides, to understand the reasons for fraudulent actions on the part of company employees, the theory of the fraud triangle has also received recognition. It consists of the following categories:

  1. Motive (an internal driving force that prompts a person to act):
  • financial needs,
  • greed,
  • reasons related to the work (underestimation, failure to provide the promised).
  1. Justification:
  • “I deserve more / the company owes me”,
  • “I will solve my current problems and return everything.”
  1. Opportunities:
  • ineffective internal and external control,
  • low labour discipline.

The above categories make it much easier to find the reasons for committing fraudulent activities, which in turn facilitates the search for possible people who benefit from committing fraudulent activities.

In addition to this, the main methods for detecting theft in the enterprise include the following:

  • an unexpected audit of the enterprise – effective in terms of obtaining operational information about the situation at the enterprise,
  • verification – the most effective method in terms of obtaining complete and reliable information directly from the primary source in an organic way (direct contact with people working at the enterprise),
  • forensic accounting of already occurred facts of fraud.

An experienced forensic accountant, to identify persons who permanently cause losses to the company, adheres to a certain procedure. Such investigative actions include primary analysis, planning, search for facts (evidence), analysis of evidence, report, and further support of the client.

It is worth noting that such an order should be applied since its violation can lead to disastrous consequences.

After the successful identification of persons involved in fraudulent activities, the problem of bringing such persons to responsibility arises, which the directors of the company will have to solve. Most often, the consequences are disciplinary liability, penalties, and administrative/criminal liability of the perpetrator.

And in case you find this work exhausting and confusing, let us bring you the good news that all this will be handled by professionals more responsibly and skillfully if you choose forensic accounting services in Delhi.

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