August 23rd, 2007
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According to the Association of Certified Fraud Examiners “Report To The Nation On Occupational Fraud And Abuse” (Report), participants in the study estimate U.S. organizations lose 5% of their annual revenues to fraud. Applied to the estimated 2006 United States Gross Domestic Product, this 5% figure would translate to approximately $652 billion in fraud losses. Of course these organizations must pass on this cost to consumers. This translates into each of us paying approximately 5% extra for fraud when we purchase a good or service. If the average household spends $40,000 for goods and services each year, their annual cost of fraud is $2,000.
Part of stopping occupation fraud is understanding it. The Report defines occupational fraud as, The use of ones occupation for personal enrichment through the deliberate misuse or misappropriation of the employing organizations resources or assets. We all know that people steal from their employers, even in very small amounts. Most of us at some time in our lives have taken home a few pencils, pads of paper, or perhaps some of the product sold by our employer. We also have heard about overstating of expense reports or the number of hours worked. These types of small frauds happen every day and cost us all billions of dollars each year. The Report breaks occupational fraud into three categories: asset misappropriation, corruption and fraudulent statements.
Asset misappropriation is the type of fraud we are most familiar with and includes the ones listed above. It is the largest type of occupational fraud in number, but not total amount. Corruption includes frauds such as bribery or conflicts of interest. Fraudulent statements generally include frauds relating to the organizations accounting system and financial statements and are the largest type of occupational fraud by amount. Recent examples of fraudulent statements are Enron, Health South, World Com and other sensational frauds, which have been well publicized.
Occupational frauds are very hard to detect and most of them go undetected. According to the Report, the main detection tools are tips, accident, internal audit, external audit and notification by police. The Report points out that tips though anonymous hotlines is the most effective way of detecting occupational frauds. This means you are the one we count on to detect these frauds. When you are suspicious that a fraud may be happening in your workplace, do something about it. If your employer has a hotline, use it. If not, you can still provide an anonymous tip. Type out your suspicions and give it to a manager, who you do not believe is involved. You can mail it, put it in his in-box or use some other method, which will not identify you as the tipster.
What can you do to stop these frauds? Make sure you dont commit them. This means the next time you need a few pencils at home, dont take them from the office. You can buy them at the store and feel good about it when you do. This type of thinking, Im not hurting anyone, only leads to encouraging others to do the same or it lets you rationalize that taking something more expensive is ok. You did not get caught taking the pencils, so take something more expensive next time. Secondly, when you are suspicious that a fraud may be happening, use the hotline. You dont have to be sure. Someone skilled in investigating fraud will investigate and you wont get your fellow employee in trouble, unless they deserve it. Thirdly, learn more about this type of fraud so you will know it when you see it. You are the main defense against occupational fraud.
Mr. Cuthill’s practice is limited to court-appointed positions in large fraud cases. His work has produced the return of millions of dollars of investors’ funds. For more information about him go to http://trusteeandexaminerCuthill.com.
To Blame or Not To BlameA man can fall many times, but he isnt a failure until he begins to blame somebody else. (John Burroughs)Fire her, she set me up! John yelled quite loudly. He was incredibly angry and for good reason. However, he was really angry at the wrong person. What he was really saying was […]
Written by info on August 23rd, 2007 with comments disabled.
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I was reading through a magazine and read an interesting article on how the SBA organization praises how it is out to help smaller businesses and entrepreneurs finance their start ups. They talked about what they say they do and what they really do. Also at the end they ask the question about do they still matter? Like do they still matter to the small business men and women who need help or are they just out for themselves.
Well let me give you the rundown of some of the points they touched on in the article. First off if you remember the post I wrote about the SBA on micro loans and the later one on free help with your business plans. Mostly that is what the SBA does according to the article. They hire retired professionals who volunteer their time and services to entrepreneurs starting out in the business world and offer loans that are guaranteed up to a certain percentage. Now where everything gets fuzzy is how they are suppose to be a substitute for new or start up businesses who can not receive traditional financing from a bank (Due to credit or lack of experience), but they got rid of the LowDoc loan that most start up businesses applied for and were approved. Main reason for the termination of the loan is because they say they were losing too much money with the program (Not profiting maybe?). The lowdoc loan was pretty much a fast application (Low Documents) to get money to fund your business, which was backed by the SBA up to a certain percent to make the bank feel safer with the transaction. Once they terminated the loan package they replaced it with the SBA Express loan, which was suppose to be the new alternative to financing small businesses.
Only thing wrong with that picture is that the requirements for the loan were stricter and really worked for companies that could demonstrate cash flow, but lacked in collateral department (Not for riskier borrowers). In order to show proof they expect two years of business operation and if your business is a start-uphow can you demonstrate cash flow and most likely it is your first year in businessmaybe even your first month! The article stated that after research how most of the Express loans were going out to businesses that should already have sufficient cash flow. I know I experienced similar problems when I applied for a loan while I was still in college and had no real credit, plus no longstanding business. Everywhere I turned they pointed me in the direction of the SBA offices for financingso I went and was declined, Mostly because my lack of a sustainable business (Plus no credit, but that is what they are suppose to be there for!) that demonstrated a path to success. I was less than a few months in at the time.
So what is your out take on this situation? Is the SBA really there to help or the publicity of helping out and making our government look good in the process?
I am the creator and author of How to start a clothing line from scratch. An entrepreneur weblog for fashion industry professionals who want to start and run a successful clothing line http://www.dobizo.com
To Blame or Not To BlameA man can fall many times, but he isnt a failure until he begins to blame somebody else. (John Burroughs)Fire her, she set me up! John yelled quite loudly. He was incredibly angry and for good reason. However, he was really angry at the wrong person. What he was really saying was […]
Written by info on August 23rd, 2007 with comments disabled.
Read more articles on ethics.
Many times we see lot of people leaving their jobs because they found the work place politics affecting their life. Internal politics involving the people at work place are some times bad and avoidable. These politics not only affect the normal working of job, but also may some time cause people to quite their jobs. This results in lose of human resource of a company. To get the good people for working in the organization is a difficult task. However by ignoring the internal politics at work place can cost the companies dearly.
People usually want to be remaining in group; they do not like others to enter their group. This tendency sometimes made lot of subgroups in the office. For every group the agenda of their group is more important than what is required. They try to promote the people in their group more over the others. They sometimes also try to let down the people of other group. This creates inter group rivalries. One group try to hinder the work of other group, in this they even forget the goals of organization. Group rivalries are most common and can be seen in big offices where lot of people work. These group politics are one of reason for collapse of work due to the non corporation and are of great cause of low performance.
Second politics is seen in individual basis. Many people try to be smart and play with the emotions of other. They are not associated to any other, still they are in all group. They pretend to be the friends of many, but actually they are with nobody. There main purpose is to achieve own results. They create misunderstanding between the people. They remove their enemy by creating a bad image for them in others eye. They never fight their enemies directly, but provoke others to take revenge for them. They try to make their enemy alone by creating misunderstanding with his friends. They make the person alone and then become friend of it. Now they know the secret about him and upon feasible time use them against him. In this way they are able to remove their enemy without fighting him directly. These kinds of politics are most dangerous and to know that some one is doing it against us is a difficult task. This kind of politics is main reason behind the many, who leave their jobs?
So we should be alert of politics on the work place and try to avoid indulging in them. Indulging in them may unnecessary cause use lot of difficulties and simultaneously should aware about the others politics about us.
http://www.geocities.com/arvindkatoch1
http://www.geocities.com/katochhelp
http://thoughts-of-a-ordinary-man.blogspot.com
To Blame or Not To BlameA man can fall many times, but he isnt a failure until he begins to blame somebody else. (John Burroughs)Fire her, she set me up! John yelled quite loudly. He was incredibly angry and for good reason. However, he was really angry at the wrong person. What he was really saying was […]
Written by info on August 23rd, 2007 with comments disabled.
Read more articles on ethics.