Question

Identify the anomalies and/or red flags of fraud present at the business. Could this fraud have been prevented or deterred?

http://bartheft.com/post/2010/01/18/Exotic-Embezzling-Investigating-Off-Book-Fraud-Schemes.aspx#comment

Answer 1

Generally in a business organisation there are chances of having red flags of fraud. here are some of them:

• excess of purchases - There may be chances of fake payees. they are used to convert excess of funds. excess purchases should be reduced as they can cover the possible payoff of purchasing agent
• Inventory shortages - Normal product loss can be happend inside the business but excessive of that could be a fradulent activity.
• Missing documents - It is a common thing in the work place for documents missing since, accidents can take place. But if such missing of documents hapens regular then it can be a fraud. this practice of fraud can be generally done in case of cheques by way of missing of cheque numbers or giving gaps between the reconciled cheque numbers
• Rounding off the amounts in invoice - The person who want to make fraud can create the invoices with rounded figures.
• Duplicate payment - duplicate payments made on behalf of the organisation generally may not lead to fraud since mistakes are common for a human being but practicing it intentionally lead to fraud.

Anomalies or Red Flag of frauds can be prevented or deterred. This can be done by having good internal controls, by giving good hikes to the employees, Good interaction with the employees etc may help in prevention of frauds.