Red Flags Of Fraud

Abstract

A fraud is an act of deceiving others for personal gain but is not usually followed by a crime. The symptoms of fraud or the red flags help understand the slight difference between a corporate fraud and a corporate crime. The continual financial frauds leading to corporate collapse and the failure of the statutory audit to detect and prevent fraudulent activities of the perpetrators lead investors and the firms and individuals to suffer. This contributed to the increased need for investigating the on the red flags of fraud. The purpose of this paper is to research on the elements of the fraud triangle which is opportunity, pressure and rationalization and identify the fraud symptoms and possible fraud perpetrators. The symptoms of
Employees familiarize the operations knowing the unmonitored accounts, which areas of the company are poorly supervised, and what size of transaction that creates investigations and inquiry.

Secondly, Personnel red flags of fraud refer to the employment policies and procedures within a company, including hiring procedures, promotional requirements, employee monitoring programs, and disciplinary standards. It deals with the personal characteristics and skills that the organization expects from the workers whereby hiring of under-qualified relatives in the firm may be evident.

Thirdly, Operational red flags of fraud highlight how a company does daily business. Key concerns for management usually include operational effectiveness and status, compliances with the regulations, usefulness of segregation of employees in order to divide power and control and the role of
It makes the evidence gathering process difficult and as such the fraud offender remains undetected. Another drawback is that the organizations fear of a reduction in market share and fall in reputation that leads entities not to disclose frauds to the statuary regulators and therefore fraudster are not punished.

The difficulties arise when the employees conspire and protect the perpetrator due to fear and intimidation. The whistle blowers fear their security as the fraudsters nowadays goes beyond any limits to protect their interest and this is where a fraud is followed by a crime. The lack of internal controls and documentation is another failure for fraud detection and these results from lack of regulatory controls and law implementations.

Recommendation

After the compilation of this research paper, it is evident that fraud is becoming a serious issue and the detection of the fraud is becoming very difficult that is a contributory factor of encouraging fraud perpetrators to commit frauds and is followed by