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The culture of your organization is unique and complex, and could be a significant driver of unethical behavior if left unchecked. Culture is established and defined by the Board of Directors and management, however, all employees make up the culture of an organization and multiple cultures exist within every organization. According to the Association of Certified Fraud Examiners (ACFE), a typical organization loses 5% of its revenue annually due to fraud. Occupational fraud, or fraud committed by an employee against the employer, can be directly impacted by the culture of the organization. Developing a culture of ethical behavior is imperative for effective risk mitigation, compliance, fraud prevention, and detection.
The Institute of Internal Auditors identified five characteristics of a healthy culture, which are listed below. A healthy culture, rather than a toxic one, can mitigate fraud risk and deter unethical or illegal behavior. If your organization does not exhibit all of these characteristics, consider what changes can be made to shift your culture into the healthy category.
What action is your organization taking to prevent fraud? Many organizations have a zero tolerance for fraud, but it’s not enough to place posters in the office common areas. Fraud can never be eliminated entirely, and without planned, intentional actions to prevent fraud, the likelihood of successful fraud attempts may increase. Below are some actions for your organization to consider to help deter fraud:
Do you need help assessing the impact of your organization’s culture as it relates to fraud prevention? P&N has a depth of resources to help prevent, investigate and analyze fraud perpetration. Contact us today to find out how we can assist.