It is worrying that a great deal of organizations continue to operate without systematic fraud prevention programs or neglect to regularly review their programs , in spite of the abundance of well-publicized data regarding the high frequency of organizational fraud and its high costs . crimes committed by individuals against organizations ( like insurance fraud ) or by organizations against individuals ( like consumer frauds ) ( Kranacher et al , 2011 ). False claims made to an insurance company , such as fictitious property damage and injury claims , in order for claimants to receive higher compensation , are referred to as insurance fraud . A common definition of consumer fraud is dishonest business practices that result in losses for customers , either monetary or otherwise . The victims believe they are participating in a legal and valid business transaction when they are actually being defrauded . Consumer fraud comes in many forms , including credit card fraud , identity theft , and deceptive advertising . Phishing scam another form of consumer fraud involves sending emails as a vendor or government agency that contains links or attachments containing malware ( software ) to steal a user ’ s login credentials .
RISK MANAGEMENT
Exploring The World Of Business Fraud
By Reuben Kisigwa
Intoduction
Business fraud is a widespread and destructive problem that affects most organizations . The landscape of fraudulent operations has changed in an era of complex financial transactions and technological breakthroughs , making it difficult for organizations to identify and stop fraud . It is worrying that a great deal of organizations continue to operate without systematic fraud prevention programs or neglect to regularly review their programs , in spite of the abundance of well-publicized data regarding the high frequency of organizational fraud and its high costs .
This article explores the intricate field of business fraud , looking at its several manifestations , the harm it causes to both individuals and corporations , and the proactive steps that may be taken by organizations to protect themselves from this constant threat .
What Is Fraud ?
Within the corporate sector , fraud is defined as an act committed , or knowledge of an act committed , with the intention of obtaining an unfair and unlawful advantage . Fraud can be internal or external .
Internal Fraud : Internal fraud is the most expensive and prevalent type of fraud . It is defined as occupational fraud carried out by one or more employees of an organization . The two categories of internal fraud are employee and management fraud . According to Elliott and Willingham ( 1980 ), management fraud refers to the intentional deception by which management intentionally causes harm to creditors and investors by providing materially false financial statements . On the other hand , employee fraud refers to fraudulent methods used to get money or other assets from an employer .
External Fraud : External fraud refers to
“
It is worrying that a great deal of organizations continue to operate without systematic fraud prevention programs or neglect to regularly review their programs , in spite of the abundance of well-publicized data regarding the high frequency of organizational fraud and its high costs . crimes committed by individuals against organizations ( like insurance fraud ) or by organizations against individuals ( like consumer frauds ) ( Kranacher et al , 2011 ). False claims made to an insurance company , such as fictitious property damage and injury claims , in order for claimants to receive higher compensation , are referred to as insurance fraud . A common definition of consumer fraud is dishonest business practices that result in losses for customers , either monetary or otherwise . The victims believe they are participating in a legal and valid business transaction when they are actually being defrauded . Consumer fraud comes in many forms , including credit card fraud , identity theft , and deceptive advertising . Phishing scam another form of consumer fraud involves sending emails as a vendor or government agency that contains links or attachments containing malware ( software ) to steal a user ’ s login credentials .
Why Do People Commit Fraud ?
A large number of fraudsters are first-time offenders who do not believe they have broken any laws . Many succumb to peer pressure , seize the chance , and rationalize their deception as a way to resolve personal problems .
Distinguished sociologist and criminologist Dr . Donald Ray Cressey was among the first individuals to examine the difference between violent and white-collar criminals . Dr . Cressey developed the Fraud Triangle Theory as part of his research on occupational fraud . This theory states that
76 MAL57 / 23 ISSUE