This is the fourth part in my series discussing corporate fraud. For more on this topic please read
Government Response to Corporate Fraud
Ultimately, all institutions should have a comprehensive fraud prevention program tailored to meet the needs of the organization. Fraud prevention programs should also include three prongs to make them healthy enough to deter fraud. These prongs are detection, investigation, and prevention. New advances in software programs can also assist in seeking out fraudulent practices and destroying them.
Whistleblower protections and training programs are another way to accomplish this task. Setting up a successful hotline and encouraging employees to speak out when they see or think they have discovered tool can serve as a valuable deterrent. Making everyone in the company well aware that this hotline exists will generally promote transparency. Training likewise assists by strengthening the corporate ethical culture and making managers more self-aware of fraudulent practices that could occur. Instilling fraud training into employees demonstrates a strong commitment to proper conduct and emphasizes the employee’s own role in the fraud prevention of the company. This training should not just be reserved for high level executives, but should also be made available to mid-level managers and even lower level employees. Great training programs for employees add layers of protection for protecting and preventing fraud and gives managers incentive to make sure fraud controls are being properly followed. Just as one bad apple can ruin a whole barrel, one bad manager can destroy an organization. Constant exposure to an embracing corporate environment with a central code of conduct can go a long way to weeding out the bad apples though.
In conclusion, fraud will continue to plague our society in the near and future. There are always those unscrupulous people who will strive to push the limits of the system in an attempt to steal as much as possible. However, a strong understanding of the issues will allow more companies to better safeguard themselves, which is ultimately better for consumers. Maybe someday we will solve the fraud problem, but substantial internal controls can go a long way to putting a company on the path to success.