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Fraud Exprosed Whot you Dont Could Cost your company millions - Joseph W.

Joseph W. Fraud Exprosed Whot you Dont Could Cost your company millions - Wiley Publishing, 2003. - 289 p.
ISBN: 0-471-27475-5
Download (direct link): fraudexposedwhatyoudont2003.pdf
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Even were our monumental research and related needs properly funded, we would still be faced with the significant task of organizing a professional body of knowledge. Even the police, after the better part of three decades of research, experimentation, and innovation, are still concerned that they lack an organized body of available knowledge similar to that found in law and medicine. Scott and Sampson, writing in Subject to Debate, the newsletter of the Police Executive Research Forum, one of the most prominent law enforcement think tanks in the
FRAUD EXPOSED
world, bemoan both the relative lack of research and the availability of that research. They point to the Office of Community-Oriented Policing Services (COPS), funded by the DOJ, as an important first step in this process. COPS, they report, will with the assistance of university professors begin to produce a series of guides for police on how to address law enforcement and community issues from the perspective of community policing precepts.8 That this is taking place after several decades of productive experience in law enforcement may give some flavor of how large and daunting a task this may be, notwithstanding its necessity.
We have seen from ACFE data that traditional activities are effective, just as we saw that during their time of greatest experimentation law enforcement budgets were also rising. Prudent public policy is often not to put all of one’s eggs into one basket, and this will hold true for organizations as well. It may well be in their best interests to make a renewed investment in tried-and-true programs and procedures even as new methodologies are being developed to make them more effective, replace them if warranted, or produce an amalgamation of the old and new. If occupational fraud has increased 50 percent in the United States in seven years, there may indeed be a high price to be paid for standing still.
Some will respond: Isn’t that what we pay the cops for? Yes, we do pay the cops, probably not enough in many instances, but self-protection is perhaps more common than we think. There are cops in every jurisdiction and neighborhood in the land, but most organizations have security guards, fences, access badges, lighting, video cameras, and alarm systems. These items, and many more, are elements of self-protection. The cops will be happy to show up—after the crime has occurred. They cannot realistically patrol the corridors of organizational America to deter occupational fraud. Even if they could, would we want them to?
Even the cops are not finished learning, no matter how impressive many find their records. There are still respected researchers and scholars who believe that the crime reductions we have discussed, no matter how impressive, are really the result of many factors—drug issues, gun issues, and incarceration rates. In questioning the efficacy of the law enforcement initiatives often cited as the primary reason for crime reduction, these persons raise interesting and useful questions, for crime, like all of human behavior, is a terribly complex business. In making these criticisms, they cite the paucity of research, even in an area as apparently front burner as crime.9 If this is so, what must surely lie ahead for us in an area buried for so long as occupational fraud? But it is a process we must go through if we are to gain important knowledge, and it will be a process that will be measured in decades, not years.
People have an interest in protecting what is close to them—their family, their property, their neighborhood, even their piece of the Internet. Jennifer Lee has commented on the unpaid, self-appointed vigilantes who patrol the Internet to identify and shut down auction fraud artists. They do this sometimes out of anger at having once been a victim themselves, but others do it to protect what they rightfully conceive of as a piece of their turf, the Web sites they enjoy visiting to
THE NEXT FIVE YEARS
browse or purchase.10 Organizational America may likewise have to decide if it needs to do a better job of protecting its neighborhood, the organization itself.
During speeches I have given to organizational executives, especially those in the private sector, I like to pose a hypothetical question. I ask them if they bought a luxury vehicle, say for $50,000, if they would spend $500 for an alarm system for the car. Invariably, the answer is “yes.” I inform them that the cost of the alarm system is 1 percent of the vehicle’s value. I then ask them if they spend 1 percent of their company’s net revenue on corporate security and financial controls. Usually, I get looked at as if I had just grown another head. The comments are typically, ‘Are you kidding? That would be crazy!” I then ask them to explain to me why they protect their car better than they protect their company. I normally do not get too many insightful answers, usually just puzzled or irritated looks.
While this story is anecdotal, it finds a remarkable degree of support in real-world statistics. The 2002 Pinkerton survey of corporate security directors found that only 9 percent had a budget that was greater than 1 percent of annual corporate revenue, while 26 percent had budgets that were less than .001 percent of annual revenue. Given that fully 44 percent of respondents did not know how large a percentage their budgets were compared to annual corporate revenue, we may presume that many of these are quite small percentages, as well.11
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