I wrote an article on these five myths about fraud nearly fourteen years ago. And really, nothing has changed. I’ve updated some of the facts and figures, but the concepts remain the same. These are some of the most common myths I see, and these traps are the reasons companies continue to become victims of expensive internal frauds.
1. Our company does not have an internal fraud problem.
While companies would like to believe they have good employees and adequate controls to prevent fraud, the fact of the matter is that half of all companies will be significantly affected by fraud. One survey estimates the average internal fraud will cost a company $150,000.
Companies cannot afford to ignore the risk of fraud and the likelihood that fraud is occurring internally. It is too expensive, particularly when one considers the fact that there are many indirect costs of fraud, including investigation and legal costs, employee attrition, and decreased employee morale.
Actively fighting fraud means implementing policies and procedures that prevent and detect fraud. Anti-fraud professionals who are experienced with the common methods of fraud can be invaluable to this process. Whether a company gets there with employees or outside consultants, it is important to secure company information and assets to prevent internal fraud.
2. Most people are honest and won’t commit fraud.
This is a dangerous approach to take to the business of fraud. It is true that most people are generally honest. But to rely on this instead of putting controls in place to prevent fraud is a big mistake.