Business Fraud and Preventative Measures
Business Fraud and Preventative Measures
“There are three things in the world that deserve no mercy, hypocrisy, fraud, and tyranny - Frederick William Robertson.” Business fraud can be commonly defined in terms of the use of a person’s occupation for personal gain or enrichment through the misuse of employing organization’s resources or assets. Currently, fraud is a pervasive problem throughout small and large companies. Failure to put in place fraud preventative procedures can put a company in financial jeopardy and optioning knowledge on current regulations along with implementing an effective fraud preventive system can mitigate fraud.
Both small and large businesses can be affected greatly by the impact of fraud. Typically, small business environments operate on lean operating margins. If they have a 10% loss of revenue, throughout a minuscule timeframe that can significantly weaken their profit margins. However large business environments, could possibly survive fiscal loss. Otherwise, their business endurance could be at risk and failure to address fraud issues places a company at a competitive disadvantage. If the fraud incidents become public knowledge, the large company can damage the organization’s brand or reputation.
The Sarbanes-Oxley Act of 2002 (SOA) was in forced for all U.S. public companies large or small and their auditors, to comply with. This legislation is arranged into eleven sections and introduced changes for stricter regulations of financial practice and corporate governance. Sarbanes-Oxley Act of 2002 was named after Senator Paul Sarbanes and Representative Michael Oxley, who were the main creators, which set numerous deadlines for compliance (Sarbanes-Oxley, 2006).
Even with the SOA legislation being mandatory for all companies to follow. Fraud is a preventive undertaking that companies have to independently monitor. Recent studies exemplify, small-business owners are victims of fraud at a
“There are three things in the world that deserve no mercy, hypocrisy, fraud, and tyranny - Frederick William Robertson.” Business fraud can be commonly defined in terms of the use of a person’s occupation for personal gain or enrichment through the misuse of employing organization’s resources or assets. Currently, fraud is a pervasive problem throughout small and large companies. Failure to put in place fraud preventative procedures can put a company in financial jeopardy and optioning knowledge on current regulations along with implementing an effective fraud preventive system can mitigate fraud.
Both small and large businesses can be affected greatly by the impact of fraud. Typically, small business environments operate on lean operating margins. If they have a 10% loss of revenue, throughout a minuscule timeframe that can significantly weaken their profit margins. However large business environments, could possibly survive fiscal loss. Otherwise, their business endurance could be at risk and failure to address fraud issues places a company at a competitive disadvantage. If the fraud incidents become public knowledge, the large company can damage the organization’s brand or reputation.
The Sarbanes-Oxley Act of 2002 (SOA) was in forced for all U.S. public companies large or small and their auditors, to comply with. This legislation is arranged into eleven sections and introduced changes for stricter regulations of financial practice and corporate governance. Sarbanes-Oxley Act of 2002 was named after Senator Paul Sarbanes and Representative Michael Oxley, who were the main creators, which set numerous deadlines for compliance (Sarbanes-Oxley, 2006).
Even with the SOA legislation being mandatory for all companies to follow. Fraud is a preventive undertaking that companies have to independently monitor. Recent studies exemplify, small-business owners are victims of fraud at a
References: Anderson A. (2013). Small Businesses: Targets of Deception. Business Credit, 115(5), 48. California CPA Education Foundation, (n.d.). Fraud Prevention Steps for Small Businesses: Retrieved from http://www.calcpa.org/Content/22046.aspx Matthews, C. (2002). Preventing Small-Business Fraud. Inc.com, http://www.inc.com/articles/2002/09/24630.html Sarbanes-Oxley Act 2002 - Guide to The Sarbanes-Oxley Act 2002, (2006): Retrieved from http://www.soxlaw.com/index.htm