Detecting Fraud in Organizations: Techniques, Tools, and Resources

Chapter Two

Fraud Detection Approaches

I think greed is healthy. You can be greedy and still feel good about yourself.

—Ivan Frederick Boesky

Old wisdom states, “Inch by inch it’s a cinch, mile by mile it’s a trial.”1 The wisdom of this simple quote can help organizations gain control in the fight against organizational fraud. This chapter addresses the issue of expectation gap in organizations, taking into consideration twenty-first-century capabilities and events. Far-reaching legislative thinking cannot replace inch-by-inch analysis and coordination of the people in an organizational process. Organizations should encourage their people to have a self-governing, morally correct attitude. This is far more effective than regulating moral behavior simply through the establishment of rule-based communications. Essentially, rules will not always deter fraud. Involving the people in the process is necessary.

This chapter features a discussion of the following:

The people perspective in implementing compliance.

Whether laws create efficiency and/or a cost benefit.

Reconciling professional and client relationships.

The assumption that people will follow rules.

Balancing employee self-interest with the organization’s interests.

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THERE IS AN EXPECTATION GAP ISSUE in today’s organizations, created by the assumption that external auditors and/or accountants are specifically engaged to find fraud, which is not the case. Auditors and/or accountants are ...