The accounting field is and has always been a sensitive one area of specialization. Therefore, accountants are expected to act in an ethical manner. One of the most pressing issues in this field is fraud control. Fraudsters do not necessarily have to be accountants. Anyone that has access to an organization’s or a government’s money can decide to embezzle funds or resources. Accountants, however, play a major role in empowering fraudsters or bringing them to justice. With the dynamic nature of technology, fraud control has become increasingly difficult over the years (Petrascu & Tieanu, 2014).
Auditing is one of the many ways through which fraud can be controlled. It entails a contracted professional and certified auditor going through a company’s financial records in order to determine whether everything is as it should be. The five fundamental principles of auditing include integrity, professionalism, competence, confidentiality and objectivity. This method has worked for years but it has also experienced challenges. At times, auditors do not abide by these principles. The main challenge, however, is that fact that the very authorities who receive audit reports are the very people who engage in fraud. In some cases, they receive the reports and refuse to share them with others as a means of covering their tracks. In other cases, auditors are offered bribes in order to corrupt their report. These challenges make fraud control very difficult especially in organizations or governments where the top leaders are corrupt (Agung, 2015).
Another major challenge is the emerging technological advancement in the field. Today, a fraudster does not have to move to different places in order to steal from an organization or government. They only need to find a good accountant with knowledge in technological accounting operations. Money can be moved to different accounts through the cyber space in an untraceable manner. Such moves make it difficult for fraud control (Petrascu & Tieanu, 2014).
Remuneration standards are posing a big problem for fraud control as well. There are no set standards in the world on how accountants should be paid. In some organizations, accountants have minor authority and are poorly remunerated. In other organizations, accountants are part of senior management and are given the mandate to head entire finance departments. Such lack of standards makes it easy for accountants with lower value and remuneration to get into temptation. If an accountant is being paid low wages and they can clearly see top managers embezzling the very funds they handle, it is quite easy for them to engage in similar practices out of bitterness and frustration.
In order to solve these issues facing fraud control, organizations should first recognize the importance and value of accountants. Accountant have the power to bring down entire companies if they decide to embezzle funds massively but they also have the power to save a company from oblivion by controlling fraud. They should, therefore, be treated with the respect that they deserve. This includes remunerating them in a manner that is worthwhile. Furthermore, organizations should not have a centralized financial system whereby finances are solely handled by one or two individuals. There should be several people with access to financial statements and with equal power to take action against corrupt officials. This minimizes the chances of auditors being bribed or having to submit reports to the wrong hands. In addition, auditors should sharpen their skills in tracing funds by renewing their education levels from time to time and networking. Lastly, Auditing should be a regular rather than a ‘once in a while’ exercise and auditors should be interchanged from time to time. This will enable organizations to curb any incidences before much damage is done (Agung, 2015).
In conclusion, the analysis covered by this paper only touches on the issues facing fraud control and outlines a few plausible solution. It, however, leaves a small gap that needs to be addressed. New laws need to be drafted in order to help curb fraud. Also, the issue of technology needs to be addressed in a broader manner.
- Agung, M. (2015). Internal Control Part of Fraud Prevention in Accounting Information System. International Journal of Economics, Commerce and Management. Volume 3, issue 12, pp. 724-739.
- Petrascu, D. & Tieanu, A. (2014). The Role of Internal Audit in Fraud Prevention and Detection. Procedia Economics and Finance. Pp. 489-497. doi:10.1016/S2212-5671(14)00829-6.