The reality is that organisations that are more intentional about creating anti-fraud awareness among employees tend to have earlier sightings when things go wrong (or are about to). This prevents the organisation from facing multiple shortcomings.
Thus, empowering employees through training that creates anti-fraud awareness in organisations is an integral part of every organisation, regardless of whether it’s a large or small one.
Let’s bring it home to Africa.
In Africa, billions of dollars are lost by organisations due to fraud and most of these organisations are never able to recover their losses. In 2019, according to the Association for Financial Professionals (AFP) Payments Fraud & Control Survey, underwritten by J.P. Morgan, “Fraud Hits Record High, Impacts 82% of Businesses.” In Africa, there is a possibility of a higher organisational fraud percentage as some organisational fraud cases are either not properly documented or are never even reported.
Fraud and theft by employees can occur in various ways and is not limited to stealing large sums of money. It includes any form of:
- Larceny and embezzlement.
- Billing (over billing, under billing, duplicated billing or fictitious billing)
- Expense reimbursement Schemes
- Payroll schemes.
- Time and information theft.
Just to mention a few.
Thus, companies should focus on empowering fraud fighters rather than fraudulent employees. Yes, it is possible!
Fraud prevention experts have developed what they call the 10-10-80 rule:
Here we are told that 10% of employees will never steal, 10% will always steal, and 80% will go either way depending on the circumstances.
Thus, it falls on the organisation’s management, both in the public and private sector, to set up controls to prevent the 80% from defrauding the organisation.
In the 1970s, criminologist Donald R. Cressey published a model called the “fraud triangle” that outlines the three conditions that lead to Fraud. This Fraud Triangle has three elements – Pressure, opportunity, and rationalisation.
Fraud analyses say the most crucial factor is an opportunity. It is so because the opportunities available for committing the fraud give motivation to the fraudsters to commit the fraud.
Ideally, not much can be done about an employee’s motive, and rationalisation Generally. As this doesn’t come into play until the employee has already decided to steal.
Therefore, the best way to break the Fraud Triangle is by removing any opportunity by setting up a robust system of internal controls and ensuring continuous training of employees on fraud awareness. Noting that the responsibility of fighting fraud is for all employees and not just a selected few.