How To Detect And Prevent Fraud

PREAMBLES

• The greatest problem facing the banking industry globally right now is fraud.

• The banking industry loses billions of dollars yearly to fraudulent activities.

• Among the frauds are executed successfully by outsiders while a reasonable number is efficiently perpetuated with the connivance of an insider/staff.

• Anybody can perpetuate a fraud.

FALSE ASSUMPTION ABOUT FRAUD

Below are some false assumptions about fraud:

1. Most individuals is not going to commit fraud.

Response: A vast majority of people, beneath certain circumstances, will commit fraud especially if they are satisfied that it’ll go undetected. Subsequently everyone must be assumed to tend to commit fraud.

2. Fraud will not be material.

Response: Fraud could be very material and it is capable of eroding the working capital of any organization which consequently results to illiquidity and insolvency.

3. Most fraud goes undetected.

Response: Most frauds are detected over time especially if due process and process is followed.

4. Fraud may be well hid and the auditor cannot detect it.

Response: There is often a loop hole that may finally come to the open. With a sound inner management process, such fraud will eventually be detected.

A well trained auditor can simply detect a fraud following correctly designed audit program.

5. Those who are caught and prosecuted aren’t wise.

Response: The employees with fraudulent intentions think that those caught will not be smart and the mindset of a primary-time fraudster is both: I’m just going to do it as soon as or, I’m too smart to get caught.

COMMON TYPES OF FRAUD

Frequent types of fraud in banking embody the next:

1. Cheque substitution

2. Cheque Suppression

3. Cheque cloning

4. Cheque kitting

5. Cheque alteration

6. Teeming and lading

7. Claiming unearned time beyond regulation allowance

8. Dry posting

9. Accumulating expenses due from unauthorized and unofficial lengthy length phone calls

10. Overstating claims for reimbursement

11. Deposit suppression

12. Adding fictitious names to the payroll

13. Overcharging prospects

14. Removing money directly from vault, till box, petty cash and so forth

15. Acquiring payments for false invoices either self-prepared or obtained provider or vendor (e.g. Hotel, air ticket and so on).

FACTORS CONTRIBUTING TO FRAUD

• Growing complexity in the construction of a corporation

• Rising pace of transaction dynamics

• Improved technological advancement which support the benefit with which transactions are concluded

• History of inattention of supervisors

• Understaffing which might cause a breakdown of twin management

• Acceptance of some stage of fraud as ‘value of doing enterprise’.

• Outdated and ineffective management measures that don’t meet settle forable global standard.

• Enhance in workers turnover which technically might lead to understaffing

• Aggressive accounting entries all in the bid to put up profit.

FRAUD SIGNS

The next are characteristics of a fraudulent staff which ought to put supervisors and associates on guard:

1. An employee who usually borrows small quantities of cash from other colleagues

2. An employee who asks to “hold” his or her personal cheque before negotiating it

3. A workers who steadily closes late and doesn’t go on vacation.

4. Low or inadequate wage levels workers

5. Staff who show resentment at not being treated pretty or being taken advantage of

6. Superiors who lack respect and appreciation for workers

7. Highly domineering senior administration

8. Employees who look like living, and spending above their means

9. Split purchases

10. Bid process irregularities

11. Similar bidders time and time once more

12. Cost of invoices from a replica reasonably than an authentic

13. Uncommon sequence of numbers on vendor invoices

EFFECTS OF FRAUD

Fraud has far reaching impact on the group and the society at large.

• Fraud can deplete the working capital of any group which will culminate in the end to distress.

• Disengagement of employees and the related social hazards to the employees and his dependant.

• Loss of confidence of shoppers, suppliers, creditors, contractors and shareholders on the group and the industry.

FRAUD ALERT AND PREVENTION TIPS

1. Assume everyone can commit fraud below the best circumstances.

2. Use your data of inner control to “think soiled” after which check out your suspicions.

3. Do not forget that good documentation does not mean something happened; only that someone said it happened.

4. Pay attention to paperwork themselves and the supporting paperwork, observing the consistency of numbers, dates amount.

5. Consider the reasonableness of account balances and accounting entries, especially adjustments

6. Develop relationships and pay attention to hints or rumors of wrongdoing. Observe up. Do not forget that people are often torn between their moral requirements and their reluctance to get involved. They seldom inform all they know within the first interview.

7. Check out hunches; first impressions are often right.

8. Be inquisitive; don’t easily settle for explanations, particularly if you happen to don’t understand them.

9. Use statistical sampling to power you to take a look at gadgets you wouldn’t generally in any other case study

10. Search for patterns of bizarre transactions. (Should you’re surprised, it is unusual!)

CONCLUSION

As a result of rising refrain for prosperity, vast majority should not prepared to sweat it on the market in making wealth. This has given rise to numerous sharp practises (fraud) leading to many being caught and jailed. Honesty, diligence, hard-work is the only route to enduring wealth with long-life. Do not involve in any sort of fraud!

If you have any questions about in which and how to use Ilya Surkov, you can make contact with us at our web site.