Occupational fraud is the use of one's occupation for unauthorized personal gain through deliberate misuse of the employing entity's resources or assets. The Association of Certified Fraud Examiners (ACFE) estimates that typical organizations lose 5% of their annual revenues to fraud (2012 ACFE Report to the Nations on Occupational Fraud & Abuse).
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It's important to note that pressure and rationalization are most often “internal” motivators that are beyond an employer's control. However, the one variable in the fraud triangle that is within the control of owners and management is OPPORTUNITY. Limiting an employee's opportunity through a strong tone at the top, proper internal controls, and oversight can limit losses due to occupational fraud.
How Does Fraud Occur?
Occupational fraud predominantly occurs as:
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How Can Businesses Minimize the Risk of Fraud?
Make your vigilance against fraud front and center. Fraud should be discussed openly and your employees should all be trained on what to look for and pitfalls to avoid. Owners and management are responsible for setting a tone of acceptable behavior. Additionally, an anonymous tip line to report fraudulent activity is always a good idea.
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What Should be Done When Fraud is Suspected?
If you suspect fraud or have received information that alleges fraud has occurred, contact legal counsel for your company, notify the local authorities, and review your insurance policy to fully understand the benefits of your coverage. You may not realize it, but your insurance may cover a portion of the loss and in some cases, the cost to investigate the loss event and establish the loss amount.
Next, contact us! We can perform an independent investigation, quantify the loss, and professionally document the event. We will work with you (or your clients) to be a seamless member of your team.
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