No it is not possible to have a fraud free society but with adequate controls and improved ethical behaviour in our society, it is possible to keep fraud at its lowest level.
What is fraud?
Fraud is wrongful or criminal activity by the fraudster intended to result in financial or personal gain of the fraudster at the expense of another party’s rights through the abuse of position or false misrepresentation. The mission of a fraudster is always to trick you in order to deprive you of the rights you have over the assets. A fraudster has no interest in you unless you have assets which they can easily steal from you.
Impact of fraud
Frauds have number of negative impacts both to the individual and society in general and the following are the key ones;
- The individual is deprived the use of an asset causing the individual financial loss and other social negative effects
- It causes a leakage in the economies of the countries causing the countries to have less resources to spend on the public services
- It negatively affects the ethical behaviour of society if not properly controlled.
You cannot successfully fight frauds on part time basis
It is difficult to fight fraudsters on part-time basis when fraudsters are focused on committing frauds as a full time occupation. They have all the time to plan the execution of the frauds. The fraudsters are aware that few organisations have resources focused on prevention, detection and discovery of frauds on a full time basis. The aim of fraudster is not mainly to conceal the fraud hundred percent but to delay the prompt detection and discovery by the victim. The delay gives the fraudster time to disposal off or to hide the stolen assets. We can only bring fraud under control if we launch integrated attack on it on full time basis.
Factors leading to fraudulent behaviour
For fraud to take place the following factors must be in place;
Opportunity- The fraudsters are able to execute their plan because of weak controls which give them an opportunity to access assets.
Financial pressure- The fraudsters develop an interest to fraudulently access other people’s assets because of financial pressures
Rationalisation –The fraudster must be able to reconcile himself or herself with the known notions of decency and trust. The fraudster creates a justification for committing fraud.
John Muhaise Bikalemesa
Director: Big Drum Advisory Services Limited