Preventing Business Embezzlement and Fraud – Part 1

November 12, 2014  •   Uncategorized  •   19 comments

I believe that no internal fraud can take place within any organization without the fraudster: 1) holding a position of trust, 2) having little or no supervision or oversight, and 3) being perceived as honest and trustworthy. Together, these three elements foster acts of dishonesty and betrayal.

            Who’s committing these crimes? Don’t be fooled by appearances. The internal fraudster is most likely a college graduate, perhaps from a “first-class” college or university. Fraudsters may live in fine homes and have delightful families. Management generally views these people as dependable, respectable and loyal – trustworthy beyond doubt. It is equally troublesome to find that the greater majority of those acts of business fraud and embezzlement that were identified over the past three years were discovered either by accident or from information provided by a “tipster” and not through those procedures executed by internal auditors, external accountants, security personnel, and fraud investigators.

            How can such costly illegal acts continue to grow and thrive in our high-tech world of crime fighting today? The answer to this question is really quite simple! The author’s experiences and research strongly suggest that the most frequent cause of any internal fraudster being able to commit significant acts of theft can clearly be placed at the feet of top and middle management. This article will continue with next post.