Organisations worldwide lose an estimated 5 percent of their gross annual revenues to fraud according to international fraud surveys conducted every two years.\r\nFraud can be devastating.\r\nBehavioural Red Flags Displayed by Perpetrators \r\n\r\n \t\r\nLiving beyond their means - This behavioural red flag was present in approximately 44% of all cases in the 2018 international fraud survey.\r\n\r\n \t\r\nAn overwhelming desire for personal gain\r\n\r\n \t\r\nHigh personal debt\r\n\r\n \t\r\nA close association with customers\r\n\r\n \t\r\nFeeling pay was not commensurate with responsibility\r\n\r\n \t\r\nA wheeler-dealer attitude\r\n\r\n \t\r\nStrong challenge to beat the system\r\n\r\n \t\r\nExcessive gambling habits\r\n\r\n \t\r\nUndue family or peer pressure\r\n\r\n \t\r\nNo recognition for job performance\u00a0\r\n\r\n\r\nFraud Prevention Plan\r\nIt is much easier to prevent fraud than to detect it.\r\nA fraud prevention plan does not eliminate fraud but it does minimise the likelihood of fraud occurring while maximising the possibility of detecting any fraudulent activity.\r\nFraud costs profits and jobs.\u00a0 Stopping fraud before it occurs is more cost effective than spending resources on detecting, investigating, prosecuting, and cleaning up after it.\r\nTo get started in implementing a fraud prevention plan consider these four basic steps:\r\n\r\n \t\r\nProviding ongoing employee anti-fraud education to all employees\r\n\r\n\r\nAccording to a 2018 international fraud survey, organisations that conducted fraud training for employees saw a 41% reduction in how much money was lost per fraud instances and a 50% reduction in how long fraud continued before being discovered.\r\nEvery employee within the organisation should be required to participate in the fraud awareness training program.\u00a0 Frequent exposure to anti-fraud topics is the key to ensuring employees absorb and apply the information provided.\r\nLet employees know where they can seek advice if faced with ethical decisions and can speak freely without any reprisal.\r\n\r\n \t\r\nProviding an effective reporting mechanism in place\r\n\r\n\r\nTips are consistently the most common detection method for cases of occupational fraud. Employees are a valuable source of information for discovering potential fraud.\r\nAn anonymous reporting channel such as a hotline, is an integral part of an antifraud control system. \u00a0Any reporting fraud channel should not only be for employees but also for suppliers, customers and other outside parties.\r\nEmployees must be made aware of the existence of the reporting mechanism, taught how to use it, and be able to trust that they can report suspicious activity confidentially (where permitted by law) without fear of reprisal.\r\n\r\n \t\r\nTone at the top is one of honesty and integrity\r\n\r\n\r\nEstablishing and applying a code of conduct was shown to reduce the cost of fraud by 56% according to a 2018 international fraud survey.\r\nManagement must lead by example and show employees through its words and actions that dishonest or unethical behavior will not be tolerated.\u00a0 An organisation that exhibits unethical behavior in management is guaranteed to have employees adopt the same attitude.\r\n\r\n \t\r\nIncrease the Perception of Detection\r\n\r\n\r\nThis might be the most effective fraud prevention method.\u00a0 The risk of being caught most often persuades likely perpetrators not to commit the fraud. The existence of a thorough control system is essential to fraud prevention. Implementing proactive audit procedures such as surprise audits, monitoring of accounts, and fraud assessments demonstrates to employees that if any fraud is occurring it will be found.