Exposing Fraud, Deters Fraud
One mistake management can make is to not let the fraud out into the light. When a fraud is swept under the rug, no one learns: not management, not the employees, and surely not the general public. Though some frauds are best kept with a tight lid, most need to be exposed so that every level of management is on the same page and can then keep key decision makers aware of how to deter the same fraud from occurring again. History will definitely repeat itself if individuals know what and how to overcome weakness in a Company’s internal controls.
Exposing a fraud is smart (see the statistic below on employees), as long as the Company changes how they conduct their business to help overcome future fraud from happening in that specific area.
An Experienced Auditor Can Detect & Expose
In a 1998 KPMG Fraud Survey of 5,000 U.S. companies (note: multiple responses given), 43% of the time the fraud was discovered by an Internal Auditor. As a result of a boom in fraudulent activity around the time of Enron and WorldCom, Auditors Internal and External to a Company have spent a great deal of time acquiring education and training so that they are aware of what to look for. The result, a reduction in securities fraud and white collar ‘cooking the books.’