The new twist of fraud helped by the new technologies is   internal fraud, mainly practiced by new generation of employees who are technology oriented and ambitious.

Financial institutions are the hardest hit by occupational fraud because they invest more in technology which puts a premium on specialised staff and consultants, which is, in turn risker. The sophistication of operating systems in the financial institutions also gives the opportunity to the specialized staff to defraud the organisation.

Another challenge is the immigration of business from monopoly to competitive market place, as many businesses have responded by empowering staff and undertaking structural reforms.  These challenges, combined with the ability to undertake more financial transactions remotely, have also created more fertile conditions, scope and opportunity for dishonest action by staff.

To mitigate the arising practice of occupational fraud, a fraud risk assessment should be powerful and proactive in the preventing and combating of fraud for any organisation.

The only means of mitigating risk of fraud is through clear communication and awareness of employees at all levels of the organisation.

To prevent occupational fraud, any organisation including government, public institutions and financial institutions should institute a fraud prevention policy that will entail similar objectives as internal control.

The Institute of internal Auditors’ standards for professional practice of internal auditing says organisations’ management can achieve proper internal control when it ensures that financial and operating information is accurate and reliable.

Others are to make sure that policies and procedures, plan, laws and regulations as well as assets are safeguarded against loss and theft, resources are used economically and efficiently and established programmes/operating goals and objectives are met.

The proactive fraud policies that organisations should institute include; analytical review, fraud assessment questionnaires, mandatory vacations, job rotation, surprise audit where possible, and management oversight.

Many organisations have historically been anxious to play down the threat from within and have been reluctant to admit to the scale of the problem or the associated financial losses.

However, for many organisations, the days when the department of human resources would handle most staff fraud cases quietly with no publicity, allowing the dishonest employee either to resign discreetly or be dismissed inconspicuously, are long gone.  Members of staff may have many opportunities to commit fraud, depending on the nature of business and the products and services offered.

Mr Mwakabula is a certified fraud examiner working with the Centre for Fraud Research and Investigations  in Dar es Salaam.

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