6.2.1 Fraud can occur for many reasons; some of the causes are as follows.
6.2.2 Poor accounting controls where accounting controls are lapse for example a bank reconciliation signals that a fraud has occurred can be missed.
6.2.3 Complacency, thinking fraud wouldn’t occur in a business, people will take advantage of this attitude.
6.2.4 Excessively complex organisational structure, designed to hide reality from third parties, Enron is a prime example of this.
6.2.5 Lack of clear moral direction from senior management, leadership stems from the top, others will adopt their behaviour.
6.2.6 No independent internal audit department, fraud and its signs are more likely to be hidden.
6.2.7 Excessively generous performance bonuses, the more temptation …show more content…
6.2.9 Lack of transparency, complex transactions can be used to hide fraud.
6.2.10 Finally, it would be unwise to ignore human nature in other words greed, a common example of this is people adjusting their expenses.
6.3 There are different types of fraud, for example:
• False accounting such as trying to improve the financial appearance of a business to obtain external financing or hiding a loss.
• Theft, for example false expense claims, fiddling time sheets, employees making private phone calls from the organisation or just as simple as direct theft of cash, stock and/or other …show more content…
6.6 There are ways in which to make an organisation more fraud resistant, below are a few techniques.
7.6.1 The use of fraud staff; these are appointed staff members within an organisation ( they could be ex bank or police workers) to work full time on fraud detection, however, this is costly and often used in very large organisations and is not something a small business like A to Z Vehicle Hire would benefit from using.
7.6.2 Management responsibility, in other words, managers should be given certain areas of responsibility, for example the payroll system, to ensure fraud is kept to a minimum. In A to Z Vehicle Hires’ case it is a smaller organisation with few employees and so the accounts manager will need to oversee the entire systems.
7.6.3 Management supervision, where senior employee oversees and checks activities such as data-entry and other accounting activities on a regular basis. This is a technique A to Z Vehicle Hire could adopt as they have enough senior staff to employees ratio and so is a feasible