Q1
Having a code a written code of conduct plays a significant role in reducing fraud and other dishonest acts in an organization. While the rules are documented, it clearly shows or lays out behavioral standards for the working team and provides the groundwork for a preemptive warning. Therefore, the team has a daily reminder of how each individual is supposed to conduct themselves in work and in doing the organization's duties and the punishment that is imminent if the codes are not followed. It makes it hard for employees to engage in fraud and dishonest acts because each employee is provided with a copy of the law of conduct to avoid giving lame reasons of ‘I did not know.' When rules are available, there is no space for lame excuses.
Q2
From the ECFE’S 2018 Report on Occupational Fraud, the piece of information that surprised me is on running employee background checks before employing them. The report shows that 52% of organizations ran background checks on the employees before hiring them, while 48% did not consider the past. From those organizations that did run the background checks, 10% were of them were alerted of red flags in the perpetrator's history but decided to hire the person anyway. I did not imagine that in the 21 st century that companies can hire employees without running background checks and how those companies that check for background checks can hire anyone with a suspicious history.
Delegate your assignment to our experts and they will do the rest.
Q3
Available research indicates that internal auditors have a higher chance of detecting fraud that external auditors. For example, the 2008 ACFE’S survey showed that 19% of the respondents said that they had a history where internal auditors identified a fraud compared to 9% who said the fraud was discovered by an external auditor. The reasons are that internal auditors develop an overall knowledge of the organization’s process, imminent risks, and threats, the organizations' team and control system as they review the organization’s system. The fact that internal auditors review the firm's policies and reports regularly like each quarter of a financial year gives them the experience to identify possible areas where fraud is likely to occur. Internal auditors also get used to formats of the organization's report, which thus can detect suspicious activities in these reports.
Q4
Modern-day organizations, enormous and medium-sized companies, employ a fraud Investigation unit whose role in the company is to detect and prevent fraud. Full-time fraud investigators help in identifying and eliminating fraud risks before they happen, thus minimizing losses through fraud. Fulltime fraud investigators have ample time to evaluate an organization’s systems, process, employees, and reports, thus making it easy to identify fraud and weak areas of these organizational factors. Full-time fraud investigators help a company from incurring the high cost of outsourcing internal auditors. Full-time fraud investigators can help the company improve its ways of developing financial reports, advice the company on how to improve its process and develop recommendations of how to seal financial loopholes or fraud activities. However, there are high costs involved in hiring and maintain a fulltime fraud investigation team. The FUI team may collide with the internal audit team, which may be caused by managerial override. Fulltime fraud investigators may lead to misjudgment and human error, which in return can cause a company considerable confusion.
