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Part I
Occupational Fraud and Corruption
Chapter 1
Introduction to Occupational Fraud and Corruption and Recent Trends
Profiling as a Solution
ОглавлениеIn terms of profiling, most fraudsters exhibit behavioral traits that can serve as warning signs of their actions. These red flags, such as living beyond one's means or exhibiting excessive territorial control issues, generally will not be identified by traditional internal controls that are designed to focus on the organization's processes rather than human behavior. Managers, employees, and auditors should be educated through the training and sensitization programs on these common behavioral patterns and encouraged to consider them, particularly when noted in tandem with other anomalies, to help identify patterns that might indicate fraudulent activity.
The cost of occupational fraud, both financially and, possibly more important, to an organization's reputation, can be acutely damaging. With nearly half of victim organizations unable to recover their losses, proactive measures to prevent fraud are critical. Management should continually assess the organization's specific fraud risks and evaluate its fraud prevention programs in light of those risks. Profiling of the fraudster and his modus operandi will be a valuable addition to the fraud fighter's toolkit.
The fact that the level of reported fraud is up is worrying, but not at all surprising. When the economic climate is difficult there is even more focus on the bottom line and driving out unnecessary costs, so fraud is more likely to be uncovered. Companies should have a proactive approach to fraud protection to avoid increases in the level of fraud. Organizations need to be taking a profit-and-loss approach to fraud risk. If companies continue to take a reactive approach to preventing fraud, it will continue to rise year after year. You cannot design all fraud risk out of a business, but you can put tripwires in place.