Occupational Fraud & Abuse
Misappropriation of business assets is the most commonly occuring fraud within corporations. Nearly 5% of annual organizational revenues have been reported lost due to fraud. The deliberate misuse of one's occupational resources or assets for personal enrichment qualifies as occupational fraud. Asset misappropriation, corruption and fraudulent financial reporting are the categories of crime, although usually there is a broad overlap of the three.
Understanding of the criminal mindset allows for appropriate prevention strategies. While background screening may help in identifying the habitual criminal, it does not help to predict such behavior among people without a history of criminal activity. Usually, workplace fraud perpetrators have no criminal history, hence identification is not easy. These individuals are also better understood as opportunistic 'trust violators' who make use of appropriate openings under financial pressure, and rationalize their act. It is important to know that managers, as well as regular employees are all capable of the crime. Understanding and studying the behavior trends may offer some direction in the process of perpetrator identification.
Deterrence is the surest way for organizations to maximize profitability by limiting preventable losses. This requires proactive measures to identify factors that promote fraud and hence prevent it. If a response process is not in place, dormant perpetrators may be motivated to repeat such acts. Thorough background evaluation is the first step of the prevention process. Setting codes of ethics, employee training on company ethics and policies, maintaining secure financial systems, and hardening the security layers can help prevent breaches. As part of responsive action, external and internal audits can be undertaken. With advances in technologies and the communication of information, more sophisticated fraud techniques and schemes are continuously being created.