According to Forbes magazine, the Enron fraud of 2001 caused its bankruptcy, wiped out $78 billion in stock market value and caused the collapse of the professional services firm, Arthur Andersen. As if these were not enough, when the Qwest Communications accounting fraud came to light, Enron’s stock dropped from a trading high of $64 in 2000 to less than $1 in 2002.
Fraud is expensive in so many ways. It decimates retirement accounts, ruins reputations and inflicts mental anguish. Businesses, owners and investors lose billions from the theft of cash and other assets, as well as devaluation and loss of economic opportunities. The effects of fraud could be very devastating with ripple effects.
There are many definitions for fraud. In some cases, it includes other criminal activities like theft, embezzlement and larceny. The legal definition of fraud usually refers to a situation where a person:
The first line of defense in minimizing fraud risk is fraud prevention. Prevention is typically the most cost-effective component of a fraud risk management system because it poses barriers to fraud, deters fraud, and eliminates the need for costly investigations.
A highly effective fraud detection system must be in place to detect frauds.
The unfortunate thing about fraud is that it usually happens before detection and it is more expensive to recover the lost assets than to prevent it from happening. At Quazy Global Ltd, we can assist your organization in fraud prevention and detection and save your company avoidable embarrassment of reputation damages and loss that could be suffered by investors, suppliers, government, staff and other stakeholders.