The Profile of a Fraudster
We are fallen human beings, we are all potential fraudsters who benefit from protective measures of checks and balances. Nevertheless, it is helpful to consider data on most prevalent fraudster profiles.
84% of cases involve Asset Misappropriation. This includes billing schemes, payroll schemes,
expense reimbursement schemes, check tampering, and register disbursements.
35% of cases involve Corruption. This includes conflicts of interest, bribery, illegal
gratuities, and economic extortion.
10% of cases involve Financial Statement Falsification. This includes fictitious revenues,
understated revenues, timing differences, and improper asset valuations.
Consider the following list of standard control measures and assess your organization’s adherence. Review your findings with your management team and discuss potential changes that need to be made.
- We have a financial policy in place checks beyond a certain amount.
- Our hiring policy requires and enforces background checks.
- We use third parties to conduct internal and external audits on a regular basis.
- We verify and check all new vendors.
- We conduct annual training on our ethics policies.Fraud Prevention and ResponseWhile we may think that some of this is unnecessary, as Christians, God calls us to a high level of vigilance to protect what he entrusts to us. We ought to be aware of any tendency toward over-application of perceived grace that prevents us from enforcing wise principles of controls. An anemic approach to vigilance only leads to a high-risk environment where we are opening up our companies to fraud and setting up our employees to fail.Build a culture of accountability, measure results, and make sure everyone knows that you are looking at their performance. Then, hire based on talent, and pay for that talent to perform at a high level of accountability and integrity.