Signs of corporate fraud

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M oshennichestvo - the deliberate misappropriation of another's property by committing fraudulent acts hidden. In the course of the company's activities, there is always a risk of corporate fraud. It can lead to serious financial and intellectual losses. It is important to know all the signs of corporate fraud and be able to quickly eliminate them.

What is corporate fraud?

In an organization, illegal actions that lead to losses take the following forms:

  • Manipulation with accounting documents and securities.

There are often cases when a group of employees works in collusion. This allows them to carry out manipulations with documents for a long time - unauthorized increase in salaries, transfer of working capital to outside accounts, improper distribution of money allocated for the purchase of equipment, and so on.

  • Organization of the shadow turnover of funds.

If senior management is involved in a fraudulent scheme, the company's losses can reach critical levels.

Unscrupulous managers, heads of departments and directors of branches can transfer money to the accounts of false clients or organizations from which the purchase of working materials and equipment is made.

It is extremely difficult to identify this type of fraud, as the appointed management can cover fraudulent schemes for years, and the owner of the company will constantly suffer losses.

  • Fraudulent appropriation of shares in an organization.

In practice, there are cases of theft of shares through the creation of forged documents or theft of the personal data of the owner of these shares.

  • Petty abuse and other forms of fraud.

When identifying and investigating corporate fraud, it is important to pay attention not only to serious fraudulent schemes, but also to minor types of theft that occur at the enterprise. Often employees steal work items, abuse their position, use official vehicles for personal purposes. Such cases also need to be stopped in time.

Signs and Fighting Fraud

To combat corporate fraud in an organization, it is important to create a comprehensive anti-fraud system. As a rule, these issues are dealt with by a special authorized security department. His responsibilities include identifying the problem at an early stage, creating a plan to stop fraud, and prosecuting those responsible.

Identifying the problem at the first sign will help you save a lot of money on investigations and avoid losses. Let's consider each of them.

Messy reporting

This characteristic concerns the documentation of activities that are associated with suppliers, contractors and other departments of the enterprise. If the security service or senior management reveals erroneous, incomplete or overdue management accounts, this is the first signal of possible fraud. In only 15% of cases, incorrect documentation is an unintentional employee error. In the remaining 85% of situations, employees deliberately do not keep reports or do not submit them on time, leaving out large expense items.

When identifying signs of messy reporting, it is important to start a detailed investigation of the problem right away. It is important to have interviews with the staff who were responsible for creating the documentation. As a rule, workers use standard excuses: equipment malfunction, software malfunction. There may also be attempts to pin the blame on secretaries and other executive staff.

Control methods:

  • Firm executives must insist on up-to-date reporting.

It is recommended that you draw up a schedule for submitting documents to management Any deviation from the schedule should be punished with preventive measures or even dismissal of the employee. In order to automate work, it is easier to use electronic programs to create schedules, schedules and tasks for each employee of the company. This allows management of large enterprises to quickly track any attempted reporting fraud.

  • A clear distribution of tasks between employees.

Only certain employees should be involved in creating reports on profits, expenses, purchases or other items. It is unacceptable to delegate such authority to secretaries, internships, or other people.

  • Protection of computers and other computing equipment on which reports are generated.

It is important to anticipate cases when an attacker illegally changes the data in the documentation. This is done to discredit reliable employees or in order to divert the attention of management from another fact of fraud.

You can protect computers by creating separate password-protected accounts. You can also store important documents in the cloud or use file encryption systems. Even if a computer is hacked, no one will be able to read the contents of the documents.

Obvious employee inaction

Employees who are scammers do not always openly engage in fraudulent schemes. Sometimes they simply slow down the process of work and production in order to cause loss of the company. These can be trusted representatives of competitors who got a job at your company.

If you notice an employee who is delaying work or the delivery of an important project, citing the most primitive reasons, this indicates his desire to harm the organization's reputation or cause it a loss.

Control methods:

  • Make sure the firm meets all security requirements.

It is important to organize constant monitoring of employees while they are at the workplace. At the same time, one should not openly observe the person, as this can have a negative impact on his trust in the leadership and make him feel limited in his rights.
Modern enterprises use video surveillance and special DLP systems that allow you to track the time spent in the workplace or all actions performed by an employee at a computer.

  • Creation of a file recovery system.

Under the pretext of inattention or ignorance, fraudsters can delete files important for the company from office computers. The security service must provide for this moment. You should install on computers special programs for recovering files and applications that keep a record of users who made changes and edits to the documentation.

  • Reprimands to employees.

If one of the employees obviously does not want to fulfill the tasks assigned to him, it is necessary to take measures: to deprive him of the bonus, the position held or to limit his duties.

As practice shows, people who value their position, after such measures, begin to do their job better because of the fear of losing it. However, it is important not to confuse the sign of fraud and the usual dissatisfaction of an employee with his salary and position in the company. Perhaps, in order to increase labor efficiency, it is worth showing a person his importance - sending him to advanced training courses, promising a bonus for overfulfilling the plan.

Organizational changes

During the period of organizational changes in the company, there is a high risk of fraudulent schemes. Changes include opening new branches, moving to another office, staff modifications, and the appointment of new leaders.

At this time, it is much easier for attackers to steal or hide important documents, create shadow schemes for distributing money. If the company has changed management, the previous security service must hand over all financial documents personally to the director or his secretaries. It is important not to lose control over the financial flows of the company or one of its branches.

Control methods:

  • Creation of electronic or physical journals about the issuance of important documentation to the hands of employees.

All documents important for the company must be digitized and stored on encrypted cloud servers. For small businesses, it is enough to create a physical archive and store it in a secure safe. All attempts to transfer files, reports and estimates must be recorded in a log with the employee's name and date.

  • When it comes to acquisitions, mergers, make sure that all documents are available and stored properly.

Lack of audit

Companies often use the services of auditors to obtain an independent assessment of their work. Often, the employees who are responsible for organizing such inspections try in every possible way to postpone the date of the auditors' visit or completely cancel the event. This speaks of the first signs of fraud that is already happening in the company.

Remember that an audit is not about finding a fraudster. It only checks all the factors of the company and looks for inconsistencies or incorrectly performed processes. Based on this data, the security service or managers should draw their conclusions about the presence of intruders and unscrupulous personnel.

Control methods:

  • In the security service, appoint a person who will be responsible for analyzing and monitoring the results of checks.

If there are delays in meeting the work schedule, find out the reason. Then, encourage the employee to complete their tasks as quickly as possible. Make sure that the same employee does not repeat the error several times. This could be the result of poor training or a sign that he is a cheater.

  • Increasing the level of responsibility among staff.

All employees must be prepared for any checks. All violations and evasion of tasks should be discussed publicly at meetings and punished with sanctions.

Behavioral anomalies

A fraudster can impersonate himself not only by actions, but also by atypical behavior. It can manifest itself in aggressiveness towards colleagues, ignoring attendance at meetings, failure to follow the instructions of management.

Control methods:

  • Please contact your HR manager.

In modern companies there is a manager or a whole department who is responsible for working with human resources (HR). Accordingly, it is the responsibility of HR managers to control employee behavior.

It is important to identify in time cases when a fraudster tries to frame another employee or creates an atmosphere of scandals and quarrels in the team. All this leads to a deterioration in the attention of the personnel and gives the attacker a chance to perform illegal actions.

Informal activities of IT staff

Often, technical personnel carry out uncontrolled IT activities. This manifests itself in the inclusion of computers outside of working hours, while managers can not online track all changes in documents and important files.

Not every company can afford an IT department, so the problem of unscrupulous programmers and administrators often affects small and medium-sized businesses. It is much easier for one person to disrupt the work of the company, because his actions will not be controlled by higher-level IT specialists.

Control methods:

  • Entrust control over IT workers to a security service or a company leader.

If the manager single-handedly controls all operations that are performed by technical specialists, time tracking programs and applications for tracking all actions at the employee's computer will help automate this process.

Please note that employees do not always set themselves the goal of deliberately harming the company. Often they simply shirk their responsibilities. Instead of doing work and maintaining the technical components of the enterprise, they spend all their time on social media or chatting. Such cases must be suppressed, because inaction is also the cause of losses.

All of the signs of corporate fraud described above can be found in any type of enterprise. It is important to identify the problem early. This will help save the firm from major losses and free it from an attacker.