5 Myths About Fraud
From my Wisconsin Law Journal article 5 Myths About Fraud:
The following are five of the fraud myths that I regularly run into in my fraud investigation practice. Whether owners and executives actually utter these out loud or not, merely buying into these myths mentally can be a recipe for disaster.
3. If our company follows government regulations, we will be protected against fraud. Unfortunately, the current accounting rules and regulations do not really provide protection against fraud. Sarbanes-Oxley is probably the most widely-recognized regulation dealing with fraud. It has had some positive effects because it has forced companies to review and document their policies and procedures.
Companies have spent enormous amounts of money on implementing Sarbanes-Oxley, and it’s probably discouraging to admit that even such an extensive project isn’t really preventing fraud. The regulation forces management and the board of directors to accept responsibility for issuing accurate financial statements, however, it doesn’t really ensure that companies have fraud prevention procedures in place.
In order to effectively prevent fraud, companies must create and implement policies and procedures specifically designed to deter and detect fraud. Again, this should be accomplished with the help of an anti-fraud professional who is experienced in the methods used by corporate fraudsters. A good fraud prevention program will actively prevent and detect fraud while still complying with the applicable regulations.
