The best way to stop fraud is to prevent it from happening in the first place. There should be plenty of protective measures in place that make fraudulent activity difficult and easily identifiable. Even in these circumstances, however, the best preventive measures may not always keep fraudulent behaviors from resulting in a detrimental outcome. In order to stop fraud before it results in significant losses, the best method is to promote whistleblowing, as the most common way fraud is revealed is through a tipster who has become aware of the activity.
Tipsters Are Most Common Source of Detection
Tipsters, or whistleblowers, are often considered the best source of detection. Perpetrators of fraud will work to find ways around whatever security measures are in place in order to commit their act of fraud, but even the most careful of perpetrators may accidentally reveal their activity to someone else. Unfortunately, the individuals who discover the fraudulent activity do not often come forward out of a fear of retribution. In order to promote the revelation of fraudulent behavior by tipsters and whistleblowers, it is vital that anonymity is offered and that there is some sort of reward offered for this information. This will make it more likely that whistleblowers come forward and begin the process of stopping fraudulent activity.
Alter the Perception of Tipsters
Regardless of the size of an organization, it is often the case that whistleblowers are not looked upon fondly by colleagues. Organizational leadership must work diligently to create an atmosphere in which it is understood that integrity is of the utmost importance and that everyone is responsible for maintaining this level of integrity. Individuals who reveal fraud should be praised for their courage and not reviled, so organizational leadership must create a system through which these individuals have an incentive for coming forward.
Integrity Starts With Organizational Leadership
If there is any suspicion that leadership is involved in fraudulent activity or is encouraging some sort of fraudulent activity to benefit the organization, there is no way that the fraudulent activity will ever be brought forth. The leaders of an organization must be totally committed to maintaining integrity in every respect, as this is the only way that anyone will feel comfortable in revealing fraudulent behavior to those in positions of leadership. Integrity must be an organizational philosophy and the value of this integrity should be demonstrated in practice as often as possible to show the organization’s clear commitment to its values.