Financial fraud continues to be a major issue with businesses both large and small worldwide. In a 2014 report, the “Association of Certified Fraud Examiners (ACFE)” determined that a business loses on average a whopping 5 percent of revenue solely from fraud. Besides the monetary value of the fraud, the organization will also experience negative psychological affects from said fraud. Another surprising statistic produced by the “ACFE” was that smaller companies with fewer than 100 employees were more prone to fraud compared to companies with over 100 total employees.
Contrary to popular belief that small companies produce a more family like environment and reduce the risk of fraud, the fact that small companies oftentimes fail to implement anti-fraud policies and training makes them vulnerable. The notion that fraud is typically a repeat offense if also somewhat of a myth, given the fact that “87% are first-time offenders with clean employment histories” (Quickbooks).
Fraud will continue to be a major global problem because of people’s inherently greedy nature. The desire to constantly grow up being told to shoot for the stars has made people go against their morals in an attempt to achieve wealth. Combined with the relatively lenient consequences associated with this white collar crime, has convinced some individuals that the risk is worth the reward. In what ways do you believe we can change this cultural mindset and reduce the prevalence of financial fraud worldwide?
“Fraud Statistics Every Business Should Know.” QuickBooks. N.p., 30 Nov. 2016. Web. 12 Mar. 2017.
Website: http://quickbooks.intuit.com/r/trends-stats/fraud-statistics-every-business-should-know/
It seems to make sense that smaller companies that cannot afford to implement controls at each step in their business process are more susceptible to fraud. FinTech could provide smaller companies the ability to reduce fraud risk by providing greater surveillance and removing opportunities for employees to commit fraud.