Quiz 4: Preventing Fraud

Business

Give suggestions to prevent and protect the fraud: While formulating the policies, structures and procedures of an organization, it is extremely important to keep the fraud and fraud prevention angles in mind. In the case considered, Karen should also keep this in mind, for her Bike and Building company. She should understand that she needs to shift from the default model followed in an organization of the occurrence of fraud, followed by investigations, which is backed by the action, and at last the resolutions, to the model followed by sound organizations. Therein, she should implement and preach the antifraud message and fraud prevention; and back it up with proper system of education and training modules to the employees to detect fraud at the respective levels, and take corresponding actions. She should also build systems to foster integrity among the organizations. Apart from this, she needs to motivate the employees to promote reporting and monitoring of unusual events. She also needs to induce the culture of proactive fraud detection and investigation and follow up.

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Three factors that are used by the organization to prevent fraud and to create a tradition of sincerity and honesty, openness and assistance are as follows: 1. To hire sincere people and to provide proper guidance for fraud awareness: In order to reduce fraud in any organization, it is very necessary to hire sincere and honest people as the employees. According to a report, one-fourth of the total fraud in any company; are committed by newly hired employees those who are addicted towards alcohol, gambling, drugs etc. Therefore, it is essential to verify the resume and background of the employees while hiring. Flawless hiring procedure is not that easy to achieve, but the employers responsible for hiring must be careful about their actions otherwise this may become detrimental for the organization. 2. Establishing an optimistic work atmosphere: Secondly, having an optimistic work culture is very effective for any organization to prevent fraud. It cannot be achieved inevitably. It takes time to establish such an ideal situation. It is easy to differentiate organizations based on their susceptibility to fraud. It is essential to create a good corporate code of conduct which conveys the message of expectation about honesty throughout the organization. The policies should be of easy access to the employees and the workforce and working actions should be constructive as well. 3. Offering an employee assistance program (EAP) to the workers: Lastly, in order to reduce fraud occurrence it is required to offer EAPs to the employees. Organizations that provide employees with efficient ways to deal with their pressure can abolish most of the probable frauds. Implementing EAPs is one of such ways.

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