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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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Given these possibilities, it would be useful to have structured studies done to determine if given rates of occupational fraud and given controls profiles exhibit any sort of causal relationship. I fear little has been done in this regard, but it is a promising—indeed, a vital—area for future research.
Thinking about our existing controls efforts in this light will lead us to the next level of the pyramid—Assumption, Innovation, and Experimentation. As we begin to more formally and rigorously study controls’ efficacy, we will invariably be drawn toward opportunities to experiment—to see if what works in “X” environment has applicability in “Y” setting. This was the original premise of this book, when I began to think about the possibility that law enforcement techniques might be adaptable to the control of occupational fraud. While my concept is a more pronounced departure from normal controls thinking, much can be done within the confines of controls methodology to advance our understanding of their internal logic, effectiveness, and transportability. George Campbell, in discussing his work in building a corporate security function at Fidelity Investments, has performed a highly useful service for both the security and forensic professions by setting forth his ideas about what has helped make his program successful. We shall examine in more detail the workings of Campbell’s program in Chapter 12.
We should note, however, that the pyramid begins to dramatically narrow at this point, since we are talking here of the amount of time and resources devoted to each area. Controls, as we have discussed, are ubiquitous. Some work better than others, some are applied more consistently than others, but every organization has them. Unfortunately, articles such as Campbell’s are not that common yet.
The third level of the pyramid is Research. As I have discussed, many fields appear promising, from neuroscience to game theory. To more fully develop as a
FRAUD EXPOSED
profession, we must begin to explore mutual research opportunities with practitioners in these fields to more formally determine their utility to the task we have at hand. Here the pyramid, with its descending surface, may be unintentionally misleading. The implication of Research being in a more narrow position is not to imply that there is a dearth of work being done in fields as broadly spread as sociology, psychology, game theory, neuroscience, criminology, and the like; the reverse is true. There is so much research of possible utility available that we must begin to think creatively of how best to access and analyze it for our purposes. This is what I believe is not being done in any significant measure; thus the location of Research toward the top of the pyramid.
Finally, the apex of the pyramid is New Grounded Techniques. I use the word grounded advisedly, since I mean to refer to new techniques in occupational fraud prevention that spring from targeted research. Given that there is a dearth of research directed or reoriented toward occupational fraud prevention, it holds that there is even less in the way of new techniques built on the findings of such research. As we move up from the base of the pyramid, we see increasingly scarce resources being brought to bear on the issues we need to address.
Now, let us build another pyramid using the same blocks but reversing the order (see Exhibit 8.2).
Exhibit 8.2 Efficacy in Controlling Occupational Fraud
Now, we can reverse the order of significance. Beginning at the top, we can, I will argue, expect additional resources put into the development of new and improved controls programs to have diminishing returns. Certainly, automation and more focused analysis will pay benefits, but I do not believe these will be as effective as other opportunities in making significant improvements in our
INTERNAL CONTROLS
occupational fraud prevention posture. There may be, a la the ACFE’s 6 percent figure, a hard limit to how far we can go with traditional systems of controls, even if we accept that their primary function is prophylactic (preventing occupational fraud), as opposed to diagnostic (detecting occupational fraud).
Yet, in the next five years, I venture to say this is where most of our time, money, and resources will be spent. In this regard, we are not unlike the cops, who spent much time, for example, developing a better nightstick, while pursuing their decades-old patrol patterns. Nightsticks, like traditional controls programs, are important, but we must seriously consider if as a profession they offer us our best return on investment.
As we drop down to Assumption, Innovation, and Experimentation, our base of influence begins to broaden. Efforts like Campbell’s are, I am sure, out there, but we need to become more aggressive and proficient in discovering and publicizing them. This will permit those in organizations great and small to begin the process of in situ experimentation that will provide valuable data to the profession. Absent a central, funded, and directed research capability, this may be the logical first step to be taken in a quest for improvement. We need not only proceed in this arena when we are sure we are onto something. Watson, the co-founder of DNA research, has commented that only an idea, a hunch, is necessary to begin the research process, noting that having an idea at least promulgates something that can be tested. Those without ideas have no research to do.
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