A fraud is committed to deceive a person or an organisation to gain advantage in terms of money, power, or wealth in any form. When this fraud or deception is done on a large scale, or within a company, it is called corporate fraud. This can contribute to the deterioration of the company and its management, affecting employees and investors.
A corporate fraud can be from a small 'siphon of funds' to a very large 'overstating of the company's funds'. Though the magnitude of the fraud varies, it might directly involve an employee or a group of employees from the lower levels, to the involvement of the top notch executive board member.
Management research has stated reasons behind fraud to be 'personal debts' or 'monetary issues'. When a person is pushed into debt and the usual income or wage is not sufficient enough to make ends meet, they are ultimately forced into thinking of a way to obtain extra money easily to supplant their debts. But in general, bigger fraud is carefully planned and committed to aid a long term benefit and not to nullify a short term debt.
The growth of corporate fraud has led to the formation and growth of 'corporate fraud consultants', who help run fraud-proof businesses. Working through various avenues, some of them educate management about prevalent fraud and about strict measures to curb it, while other consultants help to perform a detailed investigation and dig away at the bottom of the fraud if suspected in a company.
The consultants look to elaborate upon four main aspects that revolve around the crux of 'corporate fraud'. They are:
- Exploratory policy, which involves the laying down of the principles that should be followed to make the investigation fair, and treat fraud of dissimilar magnitude equally.
- Forming a team of investigators consisting of the consultants, forensics, accountants and auditors is the next vital step, and they have a modus operandi in analysing the business and identifying the fraud.
- Investigation itself is the final step after all the data gathered is collaborated to find what went wrong and how it went wrong. The main purpose will be to find out what types of fraud was conducted and to identify the persons involved in the same.
Once the consultants are hired, there is no management involvement and thus no corruption, the entire business' activities are overlooked by a third party that has no connection with the management and cannot be influenced by same. This helps to give accurate results in the investigations. The consultants also conduct seminars and workshops to educate the management and lay emphasis on the types of frauds that can be committed in the company, 'zero tolerance' steps that ensure that the fraud, if committed, does not influence others, and management principles that can be established to control such fraud in the early stages itself.
Hiring a consultant is therefore the best thing to do to reduce business losses through fraud.
Author Resource:-
David Phillips & Partners solicitors offer expert legal advice in all matters relating to corporate fraud
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