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Fraud Prevention Checklist in Business'

Paper Type: Free Essay Subject: Finance
Wordcount: 1143 words Published: 23rd Sep 2019

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Fraud Prevention


Fraud cases reported in many organizations have been caused by both the employees and managers since they are much aware of the internal structure and customs of the company thus making it easier for them to commit fraud (Howell 2017). There are various reports and checklists that have been formulated to help organizations curb this cancerous issue of fraud. It indicates that the most effective way of limiting fraud occurrences is by preventing it from happening in the first place. The checklist consists of sections that evaluate the effectiveness of fraud prevention measures placed in a certain organization. It assists the organization in achieving its goal of preventing fraud.

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Firstly, the checklist queries the organization if there is provision of anti-fraud training to all employees. It is a vital issue because most people will practice fraud on the excuse that they are not aware or out of ignorance. They should be enlightened on the consequences of their actions. There should be strict measures on the outcomes of disobeying those rules and moreover to avoid situations that might make them vulnerable to commit fraud. For instance, managers and employees should be discouraged from being bankrupt or applying for large loans that they may be unable to repay. They should be educated and feel free to speak to relevant people in cases of having unethical decisions or being in a financial difficulty. It is a very excellent measure because everyone will responsible if things go “sour” (Iyer & Samociuk 2016). In addition to that, the Checklist ensures that the reporting mechanism of an organization is in correct place. There should be availability of third party hotlines or a place where they can report suspicious confidential information. Privacy should be highly maintained because some of them especially employees will be afraid of reprisal. There can be suggestion boxes everywhere where they can report or suggest anonymously as stated by Howell.

The checklist also advocates for an increase of employees perception of fraud detection. Should the audits be conducted passively, publicized or aggressively? (Suryanto, 2016).  It evaluates on the promptness and seriousness action that an organization takes in cases of fraud. Are there any continuous software applications in place for constant fraud checking? An organization should be strict to prevent provocation of any potential fraud. Measures should be kept in place to “scare away” or make difficulties for anyone who would plan to fraud a company. It is necessary in that it will prevent the vulnerability of the company to be fraud. The management climate determines a lot of the chances a company can be exposed to fraud. It should be based on honesty and integrity. The employees should be surveyed to establish their belief on the honesty and integrity of management acts. Measures in an organization should indicate that the goals are realistic and everything is accounted for (Iyer et.al, 2016).  Have the fraud prevention aims been incorporated and is there any committee that can oversee the fraud risks? For example, the inspection committee should include members outside that organization.  It will test on their role and what has not been done or achieved as per their target as a whole organization. It is a primary measure in that the management and employees will be able to explain on their gaps and give satisfactory reasons to why the equation does not sum up. The measures formulated by the organization should ensure that the fraud risks assessments conducted practically recognize and alleviate the susceptibility to both external and internal fraud. Therefore, they will be able to put in place control measures that can deter those risks. They should ensure that there is separate allocation of duties, lack of favors, mandatory vacations and use of appropriate authorization (McMahon, Pence, Bressler & Bressler 2016). It will contribute to safe and normal working environment to everyone in the organization. The organization should also ensure that the inspection committee or department has adequate resources and authority. It will prevent cases that may arise in the future such as help from senior management. Hence, it will injure the trust members put into the organization.

In addition to that, checklist inquires about the hiring policy of any organization. It plays a major role because it determines the kind of people whom they are going to associate with. For instance, does organization conduct employee verification, their criminal background and education verification? (McMahon, et.al 2016).    Measures put in place should ensure that employees employed are of credentials. They should be supportive in all areas such as to those with emotional and financial problems. Policies formulated in an organization should be open that allows everyone to speak freely and air out their problems and suggestions. Lastly, the checklist proposes that measures of an organization should ensure that anonymous surveys are performed to gauge the employee’s spirit. An employee is required to be always self-driven and having an open mind towards achieving a certain goal in an organization (Suryanto 2016).  


Inspection department should be aware that fraud tactics are changing daily due to changes in technology. Therefore, more strict and developed measures should be enforced. Everyone’s need should be put into consideration because it is indicated that pressures, opportunities and rationalization are most significant factors that enable one to commit fraud. However, one should follow all the rules and effective measures put in place to avoid such scenarios. Human is to err but that does not justify one to commit fraud as Iyer indicated.


  • Howell, A. S. (2017). Fraud prevention: the alignment between fraud-related legislation and fraud government practices (Doctoral dissertation, Queensland University of Technology).
  • Iyer, N., & Samociuk, M. (2016). Fraud and corruption: Prevention and detection. Routledge.
  • McMahon, R., Pence, D., Bressler, L., & Bressler, M. S. (2016). New tactics in fighting financial crimes: Moving beyond the fraud triangle. Journal of Legal, Ethical and Regulatory Issues19(1), 16.
  • Suryanto, T. (2016). Dividend policy, information technology, accounting reporting to investor reaction and fraud prevention. International Journal of Economic Perspectives10(1), 138.


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