Fraud Prevention Plan - Report Example

Fraud Prevention Plan Name: Course: Tutor: Date: Table of Contents Table of Contents 1 Fraud Prevention Plan 3 Introduction ‘ 3 Background 3 Threats 4 Threat mitigation 4 Different definitions of Fraud 7 Scope 8 Assumptions 8 Framework 8 Training 9 Tip-offs anonymous 9 Recognition 10 Supplier and trading partner awareness 10 Pre-employment vetting 11 Lessons Learnt 11 Proactive Fraud Detection 12 Implementation 12 Conclusion 13 Bibliography 14 Fraud Prevention Plan Introduction ‘ Most organizations tolerate zero rate of fraud and corruption. In addition to this, all cases of fraud will be applied using all the available information and making use of existing law and controls. The controls mentioned here include checking and assessing the finaces and controls that are prescribed in the systems, policies and procedures of the given organization. The implementation of the instructions that are defined in policies that has been formulated in the organisaiton and is seen to be followed by all people and staff in that organization. It is a requirement that in cases where an employee suspects that a manager is involed in a fraud, then the report of the report can be made to other member of the management. Background Fraud has been reported in many firms calling for action to be taken to curb this menace. The existence of fraud has cut across all industries. From a number of researches that was carried out in commercial hotels, it indicated that nearly 67 per cent of the total fraud cases committed are from insiders mainly the line managers who contribute to about 83 per cent of the total fraud reported to take place within the premise. The other remaining was place under the outsiders. Fraud related crimes have shown to the researchers that if this unethical behavior is not prevented then it will result to loss of funds. Studies that were done between 2005 and 2010 revealed that up to $10,000 are lost every day as a result of fraud. This is therefore calling that measures be taken to minimize this crime. Suppliers contribute 43 per cent of total, outsiders being 22 percent and 35 per cent from insiders. The research further explained that a larger proportion of fraud occurs either between the staff and a client or supplier and a line manager or job seeker and a manager. All the cases are committed with an aim of favor of something than other colleagues. Threats Any crime committed has a negative impact to the progress of a business. The costs that are lost as a result of fraud cases are too much in that if it is not prevented earlier then it will soon call for a closure. Fraud that are brought about by the outsiders with the aim of being favor in employment will pose a threat of employing people without the right skills which will at the end lead to poor management thus more loss of funds and clients through other ways. There is a threat that if suppliers engage in fraud with commercial hotels supplies will obvious reduces at high cost at with very low quality, customers who are looking for a satisfactorily services in a commercial hotel will never ever visit such fraud affected firms because they are after quality services. Threat mitigation Fraud can be mitigated through compartmentalization whereby staffs are isolated from the rest of the people at the time of work. It is believed that frauds are done when the staffs are given freedom to interact with suppliers, outsiders and clients. Rules should be formulated that will limit them from walking out of work at some specific times of their work. During working time both parties should not be allowed to meet as they may engage in fraud crimes that will have a negative impact to the organization’s productivity. The aim of this Fraud Prevention Plan is actually to come up with strategies that hotels should employ so as to deal with this unethical behavior mainly in commercial hotels. The report is also outlining on the steps that a commercial hotel must undertake in order to prevent the occurrence of the behavior (Albrecht, Albrecht, Albrecht, & Zimbelman, 2011). Commercial hotels are all aimed at making profits as they satisfy customers. Their services range from accommodation, seminars and conference halls, receptions among others. The services of commercial hotels have seemed to be affected by fraud which is indeed among the stated behaviors which are discouraged in every premise (Vacca, 2003). Commercial hotels have been faced by fraud both internally and externally, which in itself is unethical practice. This has posed threats on how commercial hotels deliver their services (Albrech et al., 2011). One of the ways that seem to have posed threat is in case where individuals may pay more so as to receive the best service unlike other clients. The management increases the charges for some services, which will not benefit the organization but will end up in the pockets of some few individuals (Slawsky, & Zafar, 2005). On the other, outsiders are involved in this act who seek job opportunities in the organization tend to engage in corrupt acts with the aim of being considered in the recruitment. Such unethical behaviors are generated from employees, job seekers and those clients. Commercial hotels have dropped drastically in the way they operate as compared to how they used to be in the past years. This act in only preventable if the publics and management are aware of how this behavior will bring financial problems into the country. Every business premise is required that it set ethical codes of conduct and standards, which will be strictly followed. The government on the other hand is looking on ways to reduce the act of any unethical tendencies in business enterprises (Kutz, 2010). Acts that has been put in place ensures that any business enterprise observes ethics and ensures that they all follow these codes to the later. Commercial hotels are informed on the consequences caused by fraud as they try to handle their customers in a more satisfactory way. As they are aware of its results, commercial hotels have come to accept the behavior as an operational risk. On the contrary, accepting it does not mean that they support the behavior but are accepting it with the need to look those ways that can help them deal with it accordingly (Stana, 2009). Among many others the Fraud Prevention report is itself providing mechanisms such as; ability to detect fraud at its early stage, engaging on investigations so as to reduce the negative consequences of this act and to come up with initiatives that can help curb fraud. From a number of investigations that has been carried out are different researching centers, fraud entails; not using organization’s property as required, engaging on actions that relates to corruption and conflicts, not following the set tendering process and circumvention of internal controls in commercial hotels (United states, Government accoutability, 2006). These are some of the fraud risks though there are several others that have been left out. The few that have been listed helps in establishing the usefulness fraud risk assessment. The report is actually aimed at measuring how commercial hotels are effective, it will be able to ensure it is permanently put in place and also to benchmark with the best practices of the world. The report is targeted at managing fraud risks that are attached to commercial hotels. As far as fraud risk is concerned, a number of policies were formulated; Fraud Policy and Response plan that is aimed at narrowing the chances of fraud occurring as well as improving the existing policies, rules, procedures and regulations. Whistle blowing policy that was set so as to be able to detect and reacting to it so as to reduce its occurrence (Snyder, 2006). Different definitions of Fraud According to the Australian government, fraud entails corruption or abuse of office. In the UK, an Act that deals with fraud was formulated. The act defines that a person who is guilt of fraud is one who is not honest and represents himself falsely; it also indicates that if a person only wishes to benefit himself or expose another person to risks, then that person will be liable to have breached Fraud Act of 2006 (Assembly, United Nations, 2006). According to our context, fraud is any act or behavior that a person with responsibilities in a commercial hotel violates his/her duties. Fraud has been realized to exist in the commercial hotels where an employee granted responsibilities goes against the codes of the organization with aim of self-interest (Schaeffer, 2007). A group of scholars have defined fraud as misconduct of an employee for personal gains. They further stated that such people might either misbehave with organization’s resources or fool a client for his own gains (Slee, Slee, & Schmidt, 2007). Scope The act of fraud risk prevention and detection lies on the hands of the line managers who are in charge of people and processes within commercial hotels. They are also responsible for the management of both employees and clients who in one way or another may help in the eradication of fraud risk within the hotel premise (Security, Government Accountability, 2010). The human resource managers are also responsible in prevention and detection of this risk in terms of outsiders. outsiders who seek employment may bribe staff so as to be favored in the recruitment process. Assumptions All the managing staffs are in support of fraud eradication, they are also willing and able to participate in anyway to curb its occurrence by adapting the plan. Fraud prevention specialists are put in place so as to execute the numerous fraud prevention and detection measures that are highlighted in the framework column (Vona, 2008). Framework It is expected that the fraud prevention plan will come up with processes that commercial hotels will mitigate, control and reduce the chances of fraud. It will also give on ways that will aid detect fraud at its early stage as investigations continue in order to ensure fraud is minimized. The plan is aimed at digging out on the real causes of fraud. A number of measures are listed and explained in detail (Schaeffer, 2007). Training Commercial hotels are to train its staff so as to make them aware o the risks that are attached to fraud. Employees will be informed on how to detect fraud before it actually mature and thereafter contact the fraud prevention team so as to come up with a reasonable process that can easily deal with the problem (Preston, 1994). This is one of the crucial processes that every hotel must undertake because employees must get enlightened on fraud and how to deal with it fruitfully. Basing on what an individual will opt to be in future and the categories in which the staff is in and modules undertaken in modules at intervals (Stana, 2009). Tip-offs anonymous This is an instance where staffs report any case that relates to fraud. Measures that help in reducing this behavior can be maintained in order to serve effectively. People outside the organization are also free to report any case of fraud within or outside the premise. Commercial hotels have employed on those techniques that are in line with Protected Disclosures Act, whereby outsiders and employees are urged to report any act or suspicion that in real sense may lead to fraud. Specialists have been put in place to ensure that the raised issues are dealt with effectively (Plunkett, 2006). Through this mechanism, commercial hotels have hired an independent contactor who has full knowledge on the service. Anyone found committing fraud related crimes will be punished with only after the crime has been fully scrutinized. In case a different case in raise, it will be reported to responsible authorities (Morris, Mckay, & Oates, 2009). Recognition To reduce threats of intimidations, management will ensure that they use private recognition. The manager will write a letter recommending unlawful employee thereby placing it in his/her file. Supplier and trading partner awareness All the details pertaining business partners with the commercial hotels shall be obtained and be involved in undertaking the outlaid measures to prevent fraud. Commercial hotels will be pleased to know all the progammes that are being held by its business partners, formulate on proper regulations that will govern the interaction between the hotel and its trading supplier and the steps that shall be taken in a situation where a partner is found to have committed the crime. Pre-employment vetting To reduce the chances of employing fraudsters, it is advisable that the human resource department prospective employees take all the possible details that relates to the employment. The details should check on; criminal records, curriculum vitae, references, disciplinary records among other businesses. Expediting Disciplinary Processes The reaction of a fraud case should be taken with much consideration in order to save time and deal with other constructive things. Commercial hotels shall be focused on the possible solutions that shall be directed at coming up with a disciplinary process of addressing fraud. This will be best done by training responsible specialists, establishing a group of prosecutors who are outsourced. Culprits shall be suspended only when the investigations are over (Coenen, 2008). Lessons Learnt Learning shall be initiated by the reoccurrence of related cases. As a result, solid measures shall be established to meet the regular occurrence of that offence. In case of a weakness in solving a given fraud offence, an extra training shall be provided to all the staff so as to be able to deal with the problem as soon as it happens. Proactive Fraud Detection In order to fully come up with real evidences on fraud, environment that is suspected to be fraud-prone zone must be identified. This will enable the management to develop on a proper way of dealing with the problem (Montague, 2010). Verifications will be done on a yearly basis to test whether staff have actually have interests in any transactions that are traders to the hotels. In case such a thing happens, then a possibility of conflict of interest shall be indicated (Biegelman, & Biegelman, 2008). In addition, data will further be analyzed so as to know whether hotel staffs have any other relation with suppliers such as bank account sharing (Coenen, 2008). If that is so, creditors’ payment shall be regularly analyzed to reduce the possibilities of them duplicating payments. In some cases, internal audits may give unfavorable findings, in this regard therefore, an external audit team shall be employed to work with the internal audit team. Implementation In order to realize the effectiveness of the framework above, a team of practitioners shall be put in place to manage the exercise. All the departments will be encouraged to walk hand in hand with the team so as to reduce fraud within the shortest time possible. Conclusion Fraud has brought down a number of businesses because they never realized the importance of fighting it. Being unethical behavior it does not only lie in the hand of the organization staff but also to the outsiders who in one way or another may benefit from the organization in the future. Insiders and outsiders should joint hands in fighting fraud. The practitioners who are put in place to act as watchdogs on fraud should not limit themselves in terms of area they are covering but should invite any information pertaining fraud in order to totally reduce it. Bibliography Albrecht, S. W., Albrecht, C. C., Albrecht, C. O., & Zimbelman, M. F. (2011). Fraud Examination. Cengage Learning. Albrecht, S., Wernz, G., & Williams, T. (1995). Fraud: bringing light to the dark side of business. Irwin Professional Pub. Assembly, United Nations. (2006). Financed Report and Audited Financial Statement For the Bennium Ended 31 December 2005 and Report of thr Board of Auditors: United Nations Institute for Training and Research. United Nations Publications. Biegelman, M., & Biegelman, D. (2008). Building a world-class compliance program: best practices and strategies for success. Sydney: John Wiley and Sons. Coderre, D. (2009). Computer Aided Fraud Prevention and Detection: A Step by Step Guide. John Wiley and Sons. Coenen, T. (2008). Essentaials os corporate fraud. John Wiley and Sons. Collier, P. M., & Agyei-Ampomah, S. (2006). CIMA Learning System 2007 Management Accounting-Risk and Control Strategy. Elsevier. Ford, J. T. (2005). State Department: Improvements Needed to Strengthen U.S. Passport Fraud Detection Efforts. New York: DIANE Publishing. Green, J. H. (2001). The Irwin handbook of telecommunications management. McGraw-Hill Professional. Ireland, Learning Hanbook. (2004). Information Technology Law. Routledge. Kutz, G. (2010). Small Business administration 8(a) Program: FourteenInelible Received $325 Million in Sole-Source and Set-Aside Contracts. DIANE Publishing. Messina, J., Brosnan, M., & Block, E. (2000). Telecommunications expense management: how to audit your bills, reduce expenses and negotiate favorable rates. Focal Press. Montague, D. A. (2004). Fraud Prevention Techniques for Credit Card Fraud. Trafford Publishing. Montague, D. A. (2010). Essentals of online Payment Security and Fraud Prevention. John Wiley and Sons. Morris, G. D., Mckay, S., & Oates, A. (2009). Finance Director's Handbook. Butterworth-Heinemann. Plunkett, J. W. (2006). Plunkett's outsourcing and offshoring Industry Almanac 2007 (E-book): Outsourcing and Offshoring Industry Market Research Statistics, Trends and Leadind Companies. Plunkett Research, Ltd. Preston, N. (1994). Ethics for the public sector: education and training. Federation Press. Schaeffer, M. S. (2007). Travel and Entertainment Best Practices. John Wiley and Sons. Security, Government Accountability. (2010). Security management. Michigan: American Society for industial Security. Slawsky, J. H., & Zafar, S. (2005). Developing and managing a successful payment cards business. Gower Publishing, Ltd. Slee, D. A., Slee, V. N., & Schmidt, H. J. (2007). Slee's health care terms. Johnes & Bartlett Learning. Snyder, H. (2006). Small change, big problems: detecting and preventing financial misconduct in your library. ALA Editions. Stana, R. M. (2009). U.S. Asylum System: Agencies Have Taken To elp nsure Quality QR code for U.S. Asylum System inthe Asylum Adjustification Process, But Challanges Remain. New York: DIANE Publishing. United states, Government accoutability, (2006). Hurricanes Katrina and Rita federal actios could enhance preparedness of certain stateadministered federal support program: report. DIANE Publishing. Vacca, J. (2003). Identity theft. London: Prentice Hall Professional. Vona, L. (2008). Fraud Risk Assesssment: Building a Fraud Audit Program. John Wiley and Sons. Read More