For many years, fraud examiners and fraud fighters have deployed substantial resources waging the war against fraud and yet not much has been achieved. Accounting fraud and corporate fraud still make headlines almost on a daily basis.
The conventional knowledge is that fraud only occurs when the three variables in what fraud experts called the fraud triangle must exist before fraud can occur. Well, in as much as that is true, it still did not explain the reason why frauds at the corporate level still exist.
Authorities like the SEC, FBI, SOCA, etc all follow the lead all in attempt to uncover how was committed as this will help apprehend the perpetrators of the fraudulent act. Forensic accountants also follow this established pattern of uncovering fraud by analysing events in order to gather evidence to support the prosecution of a criminal.
Directors of companies go to jail for either committing fraud or not establishing adequate internal control that will safeguard the assets of a company. The SOX in the US under what many industry watchers called the rule based approach of implementing corporate governance is holding directors liable for not running a company as transparent as possible.
I can go on all day long listing efforts that are been made chasing the black-hat guys and still could not deter people from dabbling into the art of fraudulent activities. The main reason why people still commit fraud is because of the fact that some negativisms have been ingrained into our subconscious mind.
I had a chat with a colleague of mine in the office and he made a rather worrying comment. He said “all the forces on earth combined cannot stop corporate fraud if we don’t go to the grass root”. He said that given the freedom to operate (which is always there), everyone with the wrong mind-set is a potential corporate fraudster.
He argues that fraud fighting communities should channel resources into finding out the ‘why’ behind fraudulent acts in corporations and then tackle it from there.
We cannot enjoy a crime free society if the smaller units that make up the community at large are corrupt. The educational system has disregarded the importance of ethics and moral teachings and we are all paying for it.
People with sound ethical values tend to have the immune and the mental toughness needed to overcome the triangle of fraud when it comes knocking.
Corporate fraud can be stopped if we spend enough time to find out why fraud takes place in the first place. Then proffer solutions to remove the cause of corporate fraud.