Fraud is a Behavior to Be Avoided, Know Its 3 Types
Fraud is a Behavior to Be Avoided, Know Its 3 Types
One of the things that can cause companies to incur losses is fraud. You need to understand that fraud is an act of deception carried out by one or more individuals for personal gain. Fraud often occurs in financial reports. To be able to detect signs of fraud, read this article to the end.
Understanding Fraud
In general, fraud is the intentional misrepresentation of financial statements to reduce or eliminate certain amounts. Its purpose is to deceive the rightful owners of the financial statements. Some examples of fraud include securities fraud, credit card fraud, and tax fraud. Fraud can be perpetrated by individuals or even multiple people. Therefore, fraud is a form of illegal activity carried out by certain parties for personal gain.
Types of Fraud
There are many types of fraud that you should know, including:
1. Money Laundering and Embezzlement
This is not a new type of crime. In the world of fraud, crimes like this are referred to as white-collar crimes. Perpetrators usually engage in asset misappropriation. One example is the Ponzi scheme in multi-level marketing. Perpetrators misuse funds from investors for their personal interests.
2. Data Theft
One form of theft in the information technology era is data theft. Perpetrators steal important data for their own benefit. To prevent this, financial, operational, and other data should not be centralized on a single computer.
3. Corruption
A common form of crime in Indonesia is corruption. Examples include various types of corruption such as fraud, bribery, and extortion. One form of corruption is giving gifts for specific purposes or interests (gratification).
Detecting Fraud
As explained above, fraud is a form of cheating involving deception carried out by one or more individuals for personal gain. To be vigilant, here are some easy ways to detect fraud:
1. Check Operational Characteristics of Reports
Try to examine the company's financial reports. Check revenue, expenses, capital, assets, and more. If there are discrepancies, you should be suspicious of the financial reports.
2. Conduct Audits
The second detection method is to conduct audits. In this case, an objective and independent examination is performed to improve company operations. Audits are divided into two types: internal and external.
- Internal audits are conducted by personnel within the company who have the capability and competence to examine accounting records.
- External audits require assistance from external parties to analyze and detect fraud in reports.
3. Monitor Management Levels
Some incidents such as fraud or abuse of authority are carried out by management. This needs to be monitored closely and thoroughly supervised because management should be fair and not engage in fraud.
Tips for Preventing Fraud
After understanding how to detect fraud, you also need to learn how to prevent it:
1. Uphold the Law
It cannot be denied that theft and fraud are subject to the law. Perpetrators involved in such activities should be given sanctions and penalties according to applicable regulations. This needs to be done to deter future fraudulent acts that may harm the company.
2. Conduct Periodic Evaluations
An important but often overlooked aspect is evaluation. Whenever a task is completed, regardless of its nature, an evaluation should be conducted, both for individuals and teams. Evaluations aim to analyze what has been done and what hasn't. Additionally, they help identify any misappropriation of funds within the company.
3. Conduct Fraud Awareness Workshops
The last tip is for companies to hold fraud awareness workshops. Emphasize to all employees that fraudulent behavior is deviant and unacceptable. If such behavior occurs within the company, it not only harms the company but also clients and the public. It can even affect the company's established reputation.
Fraud is indeed a threat to companies. To ensure that your business is not disrupted by fraudulent behavior, Brick provides an API verification solution, which is the digitalization of account sheets. There are three benefits to using Brick's digital account sheet API: a very neat user interface, a wide variety of document formats, and prevention of fraud. Optimize your business processes with Brick for a better business.
