Who Is The Typical Fraudster Article Reviews Example

A typical fraudster is a male aged between 36 and 45 years, who is employed by the organization for more than ten years, he is a part of the senior finance position and successfully manages a fraud against his own employers with the help of another perpetrator. There has been an increase of 25% in the cases involving weak internal controls and an exploitation of the same. There are various reasons for an increase in weak internal control which are the tight budgets which force the company to cut on the expenses incurred for internal control, Fraudsters are taking advantage of this situation, less controls and even lesser mechanisms to look into the controls makes it easier to plan and carry out a fraud. Another reason is the method of discovery which has been varying between the whistle blowers to the employees in the company. Earlier, the whistle blowers accounted for a large part of information made available to the company. In 2011, there have been a few tip offs which provide information along with the customer and supplier complaints. The third reason is the resistance from the staff to lodge a complaint or to create an unnecessary issue about it. Other concerns like loss of job also affects the decision making.
Only 6 percent of red flags were acted upon in 2011 as compared to 24 percent in 2007. In the survey of 2011, 50 percent of prior red flag was not acted upon. This is a significant rate. In 2007 survey, only 21 percent of the red flags were not acted upon, which has more than doubled in the last four years. More and more companies are ignoring the red flags and giving a freeway to the penetrators.
The currently undetected fraud will emerge in greater number in the coming two years because of the economic pressure and the inability to act on the identified red flags. The companies face a challenge to recognize a fraudster and to act on the signs which are seen before the fraud is carried out. The red flags should be significantly acted upon so that no penetrator takes an advantage of the weak internal control. The increase in fraud could also be due to the time lapse between the inception and the detection of a fraud.
An organization requires a strong internal control in the first place. Establishment of a strong internal control and clear demarcation of duties among the employees ensures that no advantage of internal control is taken. Every person in the organization should be asked to take a leave once in a few years so that another person can look into his work and chances of preparation for a fraud weakens. The most important part is to work on the red flags, information found in an audit should be made available inside the organization and the red flags should be considered and worked upon. If the red flags are properly worked upon, half the work is done. Any information generated about a probable fraud should be looked into and worked upon. The organization should try to recognize a typical fraudster and ensure a close watch on him. The senior positions have easy access to information as well as hold a strong leadership, hence the position cannot be questioned. But the only way through this is to work on any possible signs or red flags made available to the organization.