Countering Fraud for Competitive Advantage: The Professional Approach to Reducing the Last Great Hidden Cost

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Introduction

In an era of tighter budgets and more competitive markets, organisations are looking for innovative ways to reduce costs and increase profits. Many strategies and innovative ideas have been pursued and advocated by gurus, from contracting out to flatter management structures. Much is made of their potential to achieve what is often described as ‘competitive advantage’.1 Business schools in universities around the world are full of academics who advocate lots of ways to achieve this. One measure, however, has not been on the ‘radar’ of the vast majority – investing in measures to counter fraud. This is largely because fraud is a hidden cost. Frequently it is not measured, or it is gauged using detected fraud losses, which hide the true costs. This book will show that it is reasonable to assume that in most organisations fraud losses are around 5 per cent, something ACFE, through less valid research, have been showing for some time.2 Now consider 5 per cent of the procurement budget or payroll in your organisation; in most cases that would amount to a significant sum of money. The good news is that there are measures to substantially reduce this, and the application of appropriate methods can reap 30 per cent plus reductions in fraud losses. This can be done relatively cheaply, thus producing returns on investment of 12× or more.3 This book will outline a model to achieve this: the professional approach to reducing fraud – the last great hidden cost – to reap competitive ...