Occupational fraud ranges from false invoices to illicit practices and fraudulent financial statements, causing billions of dollars in loss, which is not a favorable topic, but unavoidable in the real world.
What on earth is the total cost caused by occupational fraud? It is stated in ACFE’s (Association of Certified Fraud Examiners) 2008 “Report to the Nation on Occupational Fraud and Abuse” that an estimated US$994 billion in losses are caused each year, equivalent to 7% of the US GDP. What would be the percentage for China’s enterprises under a less favorable legal and business environment?
Occupational fraud has been causing tremendous losses for China’s enterprises, although most managers have not yet realized this fact well. The issuance of the Sarbanes-Oxley Act of 2002 has triggered research and practices of internal control. Obviously, a well-established internal control system can effectively prevent, or reduce, a wide range of errors and fraud.
As it is said in ‘The Art of War’ by Sun Tzu, if you know both your enemy and yourself, you will never be defeated. Thus penetrating our enemy, occupational fraud, we will be able to significantly reduce the opportunities and losses caused by fraud and in addition we can elaborate on the corporate internal control system so as to gain twice the result with half the effort.