In: Accounting
DISCUSS how an organization can be vulnerable to fraud – use specific examples from a company that you are familiar with, but please do not identify the company by name. In your opinion, which is more important - prevention or detection? Or are they equal? Identify at least two ways that the company could have prevented and/or detected the fraud that you have identified. Discuss how the company’s reaction to instances of fraud can influence employees’ future actions. Your discussion should be 325-400 words.
Support your answer using a minimum of two professional or academic sources.
when a fraud occurs in a company and u if we do not do anything about that then would turn out be a weakness and will cost a great deal of money, and the more you are not looking into what makes our organization vulnerable to fraud, the more it will cost you in the long run. non profit organizations, businesses and charities are loosing millions to scam each year. while some organizations simply do not report frauds, because they are ashamed or embarrassed or just do not know wt to do. the present scenario is trending with e-commerce activities and that is being highly exploited by the fraudulent employees across the e-commerce company. there are a lot of cases registered under the name of 'fake order cancellation emails' where the customers are being sent a mail regarding order cancellation, n upon clicking on the link they are being sent to a site that aims to collect account information like user id and password. even the gift card scams are being highly registered, where in the customer's card number and PIN are stolen in order to drain the bank accounts. if we talk about prevention or detection, it would always be advisable to prevent the fraud before it is occurred. there is no point of allowing the fraud to occur first and then later on detecting those frauds, and then making attempts to resolve them. prevention of fraud would avoid the time for detecting the frauds occurred, and also the money that is required to resolve those frauds. so, prevention is better than detection. the following ways would help the organization to prevent the frauds from their occurrence. 1) Good Internal Controls: helps to keep the organization accountable for accurate financial information and also to plan and monitor business operations. 2)Conduct of Internal Audit: how the internal accounting system is being supervised, review the company's monthly bank statements from time to time without fail. the following ways can help in detecting the frauds in the organization. conducting thorough background checks on new employees,rotating the duties of employees in account, conducting random audit of company accounts. the company's reaction to instances of fraud can influence employee's future actions in the following ways, if the company takes prompt actions on the frauds committed, that would alert the employee's and make them responsible for the work done by them. if the company take the frauds in lighter way. that would enable the employee's to take advantage for committing few more frauds and makes them irresponsible.