Home
Internal fraud is the order of the day, on a small or large scale. Also, according to the latest studies, the problem is on the rise. This entails several financial, human, and reputational costs for the company, which is why it is important to have fraud detection mechanisms, like Forensic Accounting Services in Delhi.
It is 1\ Despite this, many companies do not implement any comprehensive anti-fraud systems. Such a system should include mechanisms that operate in 3 stages:
- Internal Fraud Prevention: This is where actions such as risk assessment and controls or the implementation of a code of conduct come into play.
- Internal fraud detection: through audits, supervision, monitoring, and forensic analysis. About 50% of frauds are detected through internal audits and controls.
- Internal response to fraud: Sometimes it is not enough to fire the worker and it is necessary to go to court.
Actions to detect and prevent internal fraud
The risk of internal fraud is lower when there is a prevention and detection system. According to data, half of the corporate fraud is detected thanks to internal audits.
In terms of prevention, it is important to carry out 3 actions, if possible, in parallel:
Minimize the opportunities for internal fraud. This involves splitting the functions so that all control is not in the hands of one person, especially when that person is not properly controlled. Similarly, fraud increases when there is a high staff turnover.
Maximize the risk for the worker committing internal fraud. This requires more controls and dissuasive measures such as a sanction system that all employees are aware of. It is also important that the company has a protocol in place to protect workers who report fraud. It is estimated that one in five cases of internal fraud is detected as a result of internal whistleblowing.
Automated cost control. This is the last point, but the most important. Establish effective controls to enforce your corporate policy with a solution that digitizes corporate expenses and automatically alerts you to receipts that do not comply with corporate policies.
Periodic assessments of the risk of internal fraud
Other tools to detect and prevent internal fraud include regular fraud risk assessments, external audits, work environment assessments (a disgruntled employee may be more likely to defraud), suspicious transaction monitoring, and fraud checks, including checks on passwords and company credit cards.
While all are effective, special mention should be made of fraud risk assessments. These measures make it possible to identify potential threats and carry out appropriate checks. At the same time, they help get an idea of the employees who, a priori, might be committing fraud, as well as the type of fraud they would be willing to commit.
Some companies also conduct regular background checks of their staff, although 85% of people who commit fraud have been shown to have unprecedented.
Before concluding, it must be emphasized that the prevention of internal fraud in a company avoids a series of losses, both direct and indirect. Among the first would be the economic cost or the rumors. Indirect losses range from the cost of hiring an investigator to the bad atmosphere that would be created if employees found out. Furthermore, the company’s image would suffer.
On average, it takes 18 months to detect internal fraud, which is enough time to cause significant damage to the business. So, why not take the help of Forensic Accounting Services In India and prevent fraud beforehand?