Joseph Wellington Presentation about Management Fraud Assignment

Joseph Wellington Presentation about Management Fraud - Assignment Example Staff education on the effects of fraud will help reduce or lower fraud. It’s imperative that an organization puts in place fraud auditing measures that should be reviewed regularly and also implement fraud prevention technologies with regard to information systems management and computer systems. Introduction Fraud is a pervasive act that involves but is not limited to unauthorized access to sensitive data and information, using deception and lies to outrightly misuse or fraudulently acquire organizations’ resources and assets or use company information for unintended purposes. The effects on the organization, the individuals involved and customers can range from negative to disastrous. This paper will evaluate the adverse effects of fraud on an organization; individuals and consumers make recommendations and give a conclusion on the effects of fraud. Literature review I. Effects to the consumer a) Fraud in business affects the consumer negatively; the customer is the reason why businesses exist and fraud actually impacts negatively on them. Consumers broadly refer to anyone involved in the dynamics of a business from people that buy from the organization to shareholders. b) Consumers are affected by fraud in business because they do not get their money’s worth; for instance, in a Ponzi scheme, consumers actually end up losing money eventually. A more common type of fraud is when organizations’ lie about the origins and quality of a product; they could, for instance, sell leather items as being handmade in Italy from buffalo hide when in reality the leather jackets are actually made in Vietnam by machines using cheap cowhide. c) Customers also suffer psychologically from a feeling of being cheated or swindled and thus lose faith in business. This tends to hurt expenditure on non-essential commodities like holidays which reduces the quality of life for these customers. d) Suppliers to a business that is shut down lose a customer; whi le customers also miss a product line. If there were some customers that depended on a product and the supplier is closed down due to fraud, these customers are greatly inconvenienced as they have to look for equivalent alternatives. II. Fraud affects a business and its stakeholders (Mongie, 2009) a) Fraud affects a business in that it can be shut down, suffer irreparable legal consequences that greatly erode its assets b) Businesses also lose credibility and suffer a great damage to their image. This causes stigmatization from former associates like suppliers. The blacklisting of a business will lead to its shut down (Mongie, 2009). c) Fraud strains businesses bottom-line by reducing its profits and revenue. It is estimated globally that fraud constitutes seven percent of an organizations’ revenue and this loss could be the difference between a firm making a loss or a profit d) The identities, wealth, assets, and private information of a firm’s employees especially ma nagers are put at risk due to internal fraud threats. Fraud leads to legal consequences that result in loss of career, family assets, and personal liberties in the event of one being jailed. III Fraud affects an economy overall a) Fraud means losses that can cause a business to shut down leading to job losses and for instance contributing to the unemployment rate figures, which give a poor indicator of the state of an economy (Shahabadi, 2007).