Monday, August 8, 2011

The Financial Impact Of Fraud In Your Business

Fraud is a crime in secret, often gnawing away at the stability of a business from home. He goes unnoticed until its effects are so large that it may even be too late to do anything about it. This is why the amount of fraud is not understood correctly, because it can be calculated when it is discovered and investigated.

There is probably a link between the fraud and the strength of a nation's economy. As an example, in countries experiencing such widescale tax evasion is not available for investment in public facilities such as hospitals, police forces and the like. For a business, a fraudster can cause a business to fail completely. Often fraudsters are found only if the inner workings of a business are opened up when being reviewed by an insolvency practitioner.

So what can be done for fraud, to prevent it from occurring in the first place? Money spent on prevention of fraud should not be essential to be effective, but when it is estimated that 7% of average earnings in the business are lost to fraud annually, spending several fraud prevention measures should deserve a reasonable priority by the management!

One of the best ways that a business can begin to address the risk of fraud is by introducing what is commonly called a formal "Document Fraud Policy." This is simply the recognition by the company in writing and communicated to all staff members and even customers and suppliers, a strong stance against fraud is being taken.

A fraud policy is often a glossy book, published at some cost, especially for large international businesses. However, it may be a short photocopied sheet of paper into smaller concerns. It needs to communicate important messages to all the workforce, the managers involved. This message can be brief:

° company will not tolerate fraud

° The company expects all staff to take the same position

· Allegations of fraud must be communicated to the relevant authority

• All fraud will be vigorously investigated and prosecuted

When political leaders installed a suitable question to start cheating and higher than demonstrated by fraud and malpractice is not tolerated, improves the tone of the company and provides a less fertile ground for fraud breeding. What policy achieves is a demonstration that an organization is not complacent when it comes to fraud, and this "culture" will prevent all but the most determined fraudster from plying his trade or her. It is not possible to prevent fraud happen one hundred percent, but installed a fraud policy will reduce the risk to a manageable level. This is an essential starting point before introducing significant accounting controls and other measures to prevent fraud.



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