Mastering Fraud, Avoiding Loss

Missed calculated, sometimes, will cause a loss, especially in business. As it named, missed calculated, can be defined as an unintentional error. One thing that absolutely will cause a loss, a big loss, is fraud. It’s not the same with missed calculated, fraud can be qualified as an intentional error.

Fraud is commonly understood as dishonesty calculated for advantage. Fraud encompasses a range of irregularities and illegal acts characterized by intentional deception or misrepresentation, which an individual knows to be false or does not believe to be true.

Not only in numbers calculation, all multifarious which is done by one individual to get an advantage over another by false suggestions or suppression of the truth. We can see it as a trick, cunning, or dissembling, and any unfair way as cheated.

The loss can be in various forms. Money, property, even pride, depends on kind of fraud that was done. Individual or an organization can be the victim. So, it is very and more important to prevent a fraud rather than find out the fraudster when it is done.

How to prevent a fraud? Of course, we need to identify it as soon as possible. Recently, Grant Thornton Indonesia had just held “Fraud Master Class” seminar. P&A Grant Thornton (Philippines) Asia Pacific Lead for Business Risk Services, Michael C. Gallego, was one of the speakers.

Not only management, cause everyone should have a sense of belonging to the company and take care of everything related. “Management should actively encourage employees to report suspicious activity, as well as enact and emphasize an anti-retaliation policy,” Gallego explained.

Followed by 48 participants from 29 companies, this two days’ seminar focused on how to prevent fraud in the business. Prevention is more needed in order to avoid any loss a head. A well-known workplace violence prevention training consultant, Dr. Steve Albrecht has identified things which trigger fraud.

According to Albrecht, a combination of situational pressures, perceived opportunities, and personal integrity will trigger fraud. “When situational pressures and perceived opportunities are high and personal integrity is low, occupational fraud is more likely to occur than when the opposite is true,” Albrecht said.

Fraudster Profile

Understanding the fraudster profile should be very helpful to prevent the loss. The person must be intelligent. The trigger can be feeling challenged by the secure system, or just bored with the job routine. Don’t be fooled by the dumb. A dumb manager also potential to do fraud.

Instead of being amazed, just be careful with a person who comes to the office the most diligent one. The dangerous also come from the greedy and complainer. Another one is the only person who can authorize certain types of transactions, transactions in restricted accounts, or transactions in excess of certain levels.

At least 84% of fraudsters had never been previously charged or convicted of a fraud-related offense. Only six percent of perpetrators had been previously doing the crime.

Trust is needed to make everything goes right, but too much trust in key employees in not recommended. Clear lines of authority and responsibility are fully needed. Over all, there are six things to be warning signs; People with (Financial) problems, big spenders, rule breakers, accounting irregularities, poor controls, and bad management/company culture.

Remember, there will always be a certain number of people motivated by greed, lust, and other forces inclining towards law breaking. Some are born criminals, but others may be caused by low intelligent which are mostly connected with a crime.

Gallego also reminded, “Combined with preventive controls, detective controls enhance the effectiveness of a fraud risk management program by demonstrating that preventive controls are working as intended and by identifying fraud if it does occur.”

Understanding the personal circumstances before asking them to join an organization should be helpful. People living in equivalent social environments seems to behave in a similar, predictable fashion.  Anyway, all people, regardless of their race, class, or gender have the potential to become delinquents or criminals. Just open our mind, eyes, and ear in doing any kind of businesses.