Fraud deterrence (#34)
/In this episode we discuss the issues relating to fraud deterrence, to keep instances of fraud from ever happening. Key points made in the podcast are:
Fraud deterrence involves conditions and procedures analysis to keep fraud from taking place.
Could include the use of detection systems to spot fraud before it worsens.
The cost of fraud deterrence is a fraction of the cost of the fraud being prevented.
It avoids the loss of business reputation by a business, which might otherwise impact its contracts and loans.
A robust, bottom-up budget is a good fraud deterrence control.
Just the act of reviewing accounts is a deterrent, since employees see that you are looking over their shoulders.
The worst frauds tend to go on for an extremely long time, building in size as they get older.
It is rare to see an excessive level of control in a business.
Focus on all aspects of the business when engaged in fraud deterrence.
Conduct an operational review to identify control issues and also increase the efficiency level. Requires lots of interviews.
Difficult to do an in-house fraud deterrence review, due to the fear of recrimination.
Should do deterrence reviews about every two to three years.