1. CORRUPTION
   Of the reported cases of occupational fraud in Canada, 40 per cent involved          corruption, during which an owner, executive or employee abuses his or her power to subvert the decision-making process for private or company gain. (Some cases of corruption can also involve misappropriation or budget fraud.)
   
   Examples include:
   
   1. Collusion with a vendor to form false payments for goods or services that were never delivered.
   2. Collusion with a health care provider to make false insurance claims.
   3. Kickbacks, during which an employee receives payments from a 3rd party in exchange for business advantages.

2. MISAPPROPRIATION OF ASSETS

The most common sort of fraud is misappropriation of assets, during which an employee, executive or owner of a corporation uses his or her position to steal from a corporation. Of the cases of employee fraud reported in Canada, 85 per cent involved misappropriation of assets, consistent with the Association of Certified Fraud Examiners’ report back to The Nations: 2018 Global Study on Occupational Fraud and Abuse. (Some cases of misappropriation can also be considered corruption or budget fraud.)

Examples include:

1. theft of money, services, inventory, time or property.
2. falsified expense reports.
3. purchase order schemes, during which payments are made to false vendors.

3. FINANCIAL STATEMENT FRAUD

Of the reported cases of occupational fraud in Canada, 14 per cent involved budget fraud, during which an employee alters balance sheets, income statements or income statements with the intention to deceive people that read them. The employee’s motivation could also be personal gain, to achieve loans for the business, or to stay the business afloat. (Some cases of monetary statement fraud can also be classified as misappropriation of assets or corruption.)

Examples include:

1. falsifying sales records
2. postponing reporting expenses to a later period in order that current earnings       look higher
3. inflating the worth of an asset

It’s an employer’s worst nightmare —— an employee is dissatisfied together with his or her job and decides to defraud or steal from the corporate. There are many stories about employees committing these crimes and causing enormous damage. By recognizing signs of occupational fraud and implementing practices to stop it, you’ll lead a cheerful and productive workforce.

The Occupational Fraud Triangle
Certain conditions must be met for an employee to commit occupational fraud—these three conditions are referred to as the “fraud triangle.”

1. Motive. The defrauder must have a motive to commit fraud, and this motive is usually pressure. this will come from feeling an excessive amount of stress at work to satisfy deadlines or trying to measure a life-style that’s above his or her means. Outside problems can exist also, like a gambling addiction. Monetary gain is usually the motive behind occupational fraud.
2. Opportunity. If anti-fraud measures are too lax, the chance are often there for fraud to occur. albeit the perpetrator is financially stable, the chance to commit fraud for gain could be an excessive amount of to pass up. Being employed during a high-level, trustworthy position also can cause opportunity.
3. Rationalization. The perpetrator must be ready to justify his or her actions. If employees sense some kind of wrongdoing from the corporate, they could be ready to justify the fraud. they’ll also tell themselves they’re just “borrowing” money from the corporate with no intention to pay it back, or they could feel entitled to a raise and can commit fraud to offer themselves that “raise.”
Understanding these conditions are often the key to recognizing if occupational fraud is happening at your business.

Here are important strategies to guard against fraud:

1. Develop a culture of security that sets an ethical tone, and sends the message that dishonest behaviour won’t be tolerated.
2. Set up a reporting system (tips hotline) that permits employees to anonymously disclose fraudulent behaviours. This was the foremost common detection method within the study (detecting 39.1% of cases).
3. Schedule different types of security audits. Include internal audits, management review and external audits. Use surprise audits to make a perception of detection within the workplace.
4. Provide anti-fraud training. Employees should recognize behavioural red flags of fraudulent behaviour like living beyond your means, financial difficulties, control issues, and unusually close relationships with vendors/customers.
5. Implement other internal controls including reference checks in hiring, mandatory vacations, segregation of duties, vendor bidding process, and a comprehensive documentation management process.
6. Partner with a trustworthy document destruction company for the secure destruction of confidential paper and digital documents.

Finally, it’s the responsibility of the board and senior management to make sure the organization is protected against fraud. Having good internal controls and consistent auditing processes can help to eliminate the chance of fraud within your organization.