Corporate Fraud Prevention

Corporate Fraud Prevention

October 9, 2011

Abstract

Fraud is a deliberate misrepresentation that causes someone to suffer damages, usually a loss in money. If someone lies, this is considered fraudulent in some form. Financial reporting fraud is committed to make an organization look better in earnings. Most fraud cases are conducted by white collar criminals, or business professionals that have the knowledge and intention to commit a crime. Corporations need a plan detailing how to deal with fraudulent acts. The plan of action will be discussed along with how to implement it.

Corporate Fraud Prevention

Protection of Corporate Executives

Identity theft is when someone uses someone's personal information, like their social security number, name, credit card number, without the person's permission. Identity theft is committing fraud. The Federal Trade Commission (FTC) has estimated that as many as 9 million Americans will have their identity stolen each year (ftc.gov). Everyone is at risk for identity theft including corporate executives.

Identity thieves are skilled in using a variety of methods to get ahold of their information. The corporation needs to have a confidentiality policy set to make sure that all private information about their employees is safe. All documents should be placed in a shredder box with a lock or shredded that obtain the confidential information. Thieves like to go dumpster diving and will rummage through trash to find the personal information. A special storage device can be used to skim credit card numbers. Another way would be sending out spam or a pop-up to the corporate executives, which is called phishing, where they try to act like a bank.

If the corporation receives mail, they should make sure that all outgoing and incoming mail is either picked up by the mailman or taken to the post office. Corporations have to collect social security numbers, names, addresses and account numbers from their employees. The first thing an executive should do, if they have their identity stolen or their personal information, is to call the local police department. The situation needs to be reported and if the police cannot handle it, then call the FBI or U.S. Secret Service. The bank or business accounts that may have been jeopardized should be contacted next with the stolen information.

Major credit bureaus, like Equifax and Experian, can provide additional information about how their social security numbers might have been compromised (business.ftc.gov). The credit bureaus can put fraud alerts on all your accounts. Visit www.ftc.gov/idtheft to find all the information needed about how to deal with identity theft. A complaint should be filed with the FTC online or call 1-877-ID-THEFT, which will be made available to law enforcement. Corporate executives should not use their social security number for any reason other than new employment, to join a bank, or apply for certain loans or credit services. All personal documents containing these numbers should be placed in a locked safe box or at a bank in a safety deposit box.

The key to avoid identity theft is to guard financial information, by only using card to pay in person or on secured site. Keep social security card confidential by not giving it to anyone unless you know them (fraud.org). Beware of crooks who act like they are from a company the executive does business with by phone or email. Keep all mail that contains account numbers in a safe place. Get off of any credit marketing lists by calling 1-888-567-8688. Make sure to memorize all PIN numbers and passwords and do not leave them in a wallet or purse. Check credit reports regularly and ask for free copies of the credit report.

Loss Prevention Education Workshop

The corporation or business needs to provide in-service hours for employees to educate them on loss prevention. The mandatory classes should be offered at different times and days to fit employee schedules. The classes could also be offered online for employees that work out of town or cannot attend a class. Loss prevention education is used to prevent loss or theft within a business or corporation. A corporation can conduct quarterly inventory checks on equipment and install security cameras for prevention.

One example of theft is vendors who give out samples. The vendors also might unload their trucks and walk away from the store. A vendor that might be in and out frequently and on the move in the store might be stealing. A vendor who will service his product before he signs into the office is another example. If a credit slip is not issued when exchanging a product evenly, a red flag should be thrown up. An invoice should contain descriptions of the merchandise delivered. One company made sure to check all cash registers for theft. Some examples of that would be: open drawer, no sale ring, voiding a sale, short changing, penciled additions, and money theft. Employees may also steal directly by having the merchandise on them or at the back door. Bank deposits and payroll accounting should be monitored completely to make sure fraud is not being committed.

Employee theft can be prevented by hiring employees who have a background check performed. Screening of employees who apply online