What Is Company Fraud And How Do You Stop It? (part Of )

Did you know that it is very likely your company is a victim of fraud? In fact, it's probably happening right now! Fraud takes many forms - some obvious and well known, others subtle and unmarked. This two-part article sheds some light on the topic. Part helps you determine whether your company is vulnerable to (or, indeed, already a victim of) fraud. It discusses fraud in further detail and provides definitions and real-life fraud examples. Part goes on to explain how you can minimize fraud in YOUR company. What is Fraud? Companies around the world lose a staggering amount of money to fraud and abuse. According to government and private studies, the following example is typical. A manufacturing company earns $ million in revenue and $ million profit per year. Fraud and abuse cost approximately % of revenue ($. million). The company's profit margin on revenue is %, therefore they need to generate an additional $ million in revenue (% additional revenue) just to cover the cost of fraud and abuse. (Source PWC.) The enactment of the United States Sarbannes Oxley Act of was a direct result of numerous well-publicized accounting scandals (some may say "frauds") involving high-profile companies. The intent of the Act was to not only close the loopholes that made these transgressions possible, but to also hold companies accountable for those transgressions. But what exactly is fraud? The broadest definition of fraud (as per the Merriam-Webster's Dictionary of Law,