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Second Article in 3-Part Newsletter Series on Embezzlement Detection and Prevention

Stephen Linker of RosenfarbWinters has just published the second article in a 3-part series on embezzlement detection and prevention.

This article focuses on three key factors that determine whether a person will commit fraud.  The three factors, which comprise the so-called “fraud triangle,” are: 1- perceived pressure facing the person, 2- perceived opportunity to commit fraud, and 3- the person’s rationalization, or integrity. Understanding these three factors can help a company establish procedures and systems that prevent embezzlement and help auditors more easily detect embezzlement when it occurs.

Taking factor #2 as an example, here is a list of conditions cited in the article that would increase the perceived opportunity for fraud:

a. Inadequate segregation of duties

b. Failure to inform employees about company rules and about the consequences of violating them

c. Rapid turnover of employees

d. Constantly operating under crisis conditions

e. Absence of mandatory vacations

f. Failure to uniformly and consistently enforce standards and policies or to punish perpetrators.

See the full article here.


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