Risks of corporate fraud and its management

Risks of Corporate Fraud and its Management

The prevention, investigation, and identification of the risk of corporate fraud are the factors that will make it possible to draw a demarcation line between the companies that manage the risk from those that will instead be destined to suffer damage in some cases significant and therefore lethal. 

Forensic accounting services in Delhi allow the implementation of company policies aimed at preventing, by identifying them, fraud, and related business risks.

While fraud is very likely to arise, many companies have not yet established procedures to prevent, detect and respond to fraud. One such example of protecting your company against risks like those related to tax matters is to take the help of a chartered accountant service in GST.

By analysing its processes that are most exposed to the risk of fraud, each company can provide policies that are the fundamental starting point for the development of a system to combat corporate fraud.

Some examples of corporate fraud are:

  • Misappropriation, which covers the theft or misuse of company resources;
  • The false corporate communications and/or falsification of financial statements for tax evasion and/or diversion of economic resources;
  • The corruption between private individuals such as the use or acceptance of bribes.

What drives a person to commit fraud, for example, to evade and/or not pay taxes to the govt.?

In sociology, three factors are reported that lead a company to commit corporate fraud and they are: motivation and then opportunity and rationalization.

The classic reason is greed and/or need due primarily to financial difficulties. Another impetus is the scarce fear of being discovered, and this is likely to happen in environments where controls are easily evaded.

Finally, the belief that the fraud is done in the interest of the company and/or to the detriment of top management victims who “deserved” to be hit.

Fraud is very likely to occur when a company member is pushed by an unsatisfactory “need” in the workplace, taking advantage of the poor control, “self-convinces” that his action, therefore falsifying and defrauding, is lawful and therefore leads it to appropriate something that his ego believes is due to him.

To combat fraud, the answer is to reduce motivations, situations, as well as opportunities to commit them; there is, therefore, a need for the corporate management body to provide a structure that implements control programs aimed at reducing the risk of fraud, capable of putting in place adequate responses to stem the economic and image damage caused by fraud.


The internal control system of a company is not simply a body inserted in the company organization chart but must be something more complex, made up of people, principles, rules, and procedures.

Therefore, one should act on the control of personnel by verifying the reasons and risks associated with sensitive roles, investigating their motivations and claims to be able to foresee any predisposition to fraud.

An effective and adequate control system should allow, on the one hand, constant monitoring of the activities and, on the other, a prompt capacity to intervene.

Every company is exposed to the risk of fraud, a risk that cannot be eliminated, but which can be limited by developing procedures capable of guaranteeing a high probability of promptly intercepting, or even better, preventing the offense.

So, don’t just sit and wait for fraud to occur and choose internal audit outsourcing India to implement appropriate internal controls in your company.

This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

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